Trading Price Action Trading Ranges: Technical Analysis of Price Charts Bar by Bar for the Serious Trader (Wiley Trading) - Hardcover

Brooks, Al

Hardcover

ISBN 10: 1118066677 ISBN 13: 9781118066676

Verlag: Wiley, 2012

Inhaltsangabe

Praise for Trading Price Action Trading Ranges

"Al Brooks has written a book every day trader should read. On all levels, he has kept trading simple, straightforward, and approachable. By teaching traders that there are no rules, just guidelines, he has allowed basic common sense to once again rule how real traders should approach the market. This is a must-read for any trader that wants to learn his own path to success."
―Noble DraKoln, founder, SpeculatorAcademy.com, and author of Trade Like a Pro and Winning the Trading Game

"A great trader once told me that success was a function of focused energy. This mantra is proven by Al Brooks, who left a thriving ophthalmology practice to become a day trader. Al's intense focus on daily price action has made him a successful trader. A born educator, Al also is generous with his time, providing detailed explanations on how he views daily price action and how other traders can implement his ideas with similar focus and dedication. Al's book is no quick read, but an in-depth road map on how he trades today's volatile markets, complete with detailed strategies, real-life examples, and hard-knocks advice."
―Ginger Szala, Publisher and Editorial Director, Futures magazine

Over the course of his career, author Al Brooks, a technical analysis contributor to Futures magazine and an independent trader for twenty-five years, has found a way to capture consistent profits regardless of market direction or economic climate. And now, with his new three-book series―which focuses on how to use price action to trade the markets―Brooks takes you step by step through the entire process.

In order to put his methodology in perspective, Brooks examined an essential array of price action basics and trends in the first book of this series, Trading Price Action TRENDS. Now, in this second book, Trading Price Action TRADING RANGES, he provides important insights on trading ranges, breakouts, order management, and the mathematics of trading.

Page by page, Brooks skillfully addresses how to spot and profit from trading ranges―which most markets are in, most of the time―using the technical analysis of price action. Along the way, he touches on some of the most important aspects of this approach, including trading breakouts, understanding support and resistance, and making the most informed entry and exit decisions possible. Throughout the book, Brooks focuses primarily on 5 minute candle charts―all of which are created with TradeStation―to illustrate basic principles, but also discusses daily and weekly charts. And since he trades more than just E-mini S&P 500 futures, Brooks also details how price action can be used as the basis for trading stocks, forex, Treasury Note futures, and options.

Über diesen Titel

Über die Autorin bzw. den Autor

Al Brooks is a technical analysis contributor for Futures magazine and an independent day trader. His approach to reading price charts was developed over two decades in which he changed careers from ophthalmology to trading. Brooks graduated from The University of Chicago Pritzker School of Medicine in 1978 and received a BS in mathematics with honors from Trinity College in 1974. His website, brookspriceaction.com, outlines his trading approach and views as well as hosts a subscription-based daily trading chat room in which Brooks talks with other traders about the market.

Von der hinteren Coverseite

The key to being a successful trader is finding a system that works and sticking with it. Author Al Brooks, a technical analysis contributor to Futures magazine and an independent trader for twenty-five years, has done just that. Over the course of his career, he's found a way to capture consistent profits regardless of market direction or economic climate. And now, with his new three-book series―which focuses on how to use price action to trade the markets―Brooks takes you step by step through the entire process.

In order to put his methodology in perspective, Brooks examined an essential array of price action basics and trends in the first book of this series, Trading Price Action Trends; provides important insights on trading ranges, breakouts, order management, and the mathematics of trading in this current book Trading Price Action Trading Ranges; and then moves on to discuss trend reversals, day trading, daily charts, options, and the best setups for all time frames in the third, and final, book of this series, Trading Price Action REVERSALS.

Divided into five comprehensive parts, Trading Price Action Trading Ranges skillfully addresses how to spot and profit from trading ranges―which most markets are in, most of the time―using the technical analysis of price action. Along the way, it touches on some of the most essential aspects of this approach, including:

• Trading breakouts, which are transitions from trading ranges to trends, and understanding the gaps they create
• The two types of "Magnets," Support and Resistance, and what they mean once the market breaks out and begins its move
• Pullbacks, which are transitions from trends to trading ranges
• The characteristics commonly found in trading ranges―areas of largely sideways price activity―and examples of how to trade them
• Honing your order and trade management skills so that you can make more informed entry and exit decisions
• And much more

Throughout the book, Brooks focuses primarily on 5 minute candle charts―all of which are created with TradeStation―to illustrate basic principles, but also discusses daily and weekly charts. And since he trades more than just E-mini S&P 500 futures, Brooks also details how price action can be used as the basis for trading stocks, forex, Treasury Note futures, and options. For your convenience, a companion website, which can be found atwiley.com/go/tradingtrends, contains all of the charts provided in the book.

Trading is a rewarding endeavor, but it's hard work and requires relentless discipline. To succeed, you have to stick to your rules and avoid emotion―and you have to patiently wait to take only the best trades. Understanding, and utilizing, the information found in Trading Price Action Trading Ranges is the next logical step to achieving this goal. With this guide, and the other two books in the series, you'll discover how to develop the patience and discipline to follow a sound system, and reap potentially huge financial rewards in the process.

Aus dem Klappentext

The key to being a successful trader is finding a system that works and sticking with it. Author Al Brooks, a technical analysis contributor to Futures magazine and an independent trader for twenty-five years, has done just that. Over the course of his career, he's found a way to capture consistent profits regardless of market direction or economic climate. And now, with his new three-book series―which focuses on how to use price action to trade the markets―Brooks takes you step by step through the entire process.

In order to put his methodology in perspective, Brooks examined an essential array of price action basics and trends in the first book of this series, Trading Price Action Trends; provides important insights on trading ranges, breakouts, order management, and the mathematics of trading in this current book Trading Price Action Trading Ranges; and then moves on to discuss trend reversals, day trading, daily charts, options, and the best setups for all time frames in the third, and final, book of this series, Trading Price Action REVERSALS.

Divided into five comprehensive parts, Trading Price Action Trading Ranges skillfully addresses how to spot and profit from trading ranges―which most markets are in, most of the time―using the technical analysis of price action. Along the way, it touches on some of the most essential aspects of this approach, including:

• Trading breakouts, which are transitions from trading ranges to trends, and understanding the gaps they create

• The two types of "Magnets," Support and Resistance, and what they mean once the market breaks out and begins its move

• Pullbacks, which are transitions from trends to trading ranges

• The characteristics commonly found in trading ranges―areas of largely sideways price activity―and examples of how to trade them

• Honing your order and trade management skills so that you can make more informed entry and exit decisions

• And much more

Throughout the book, Brooks focuses primarily on 5 minute candle charts―all of which are created with TradeStation―to illustrate basic principles, but also discusses daily and weekly charts. And since he trades more than just E-mini S&P 500 futures, Brooks also details how price action can be used as the basis for trading stocks, forex, Treasury Note futures, and options. For your convenience, a companion website, which can be found atwiley.com/go/tradingtrends, contains all of the charts provided in the book.

Trading is a rewarding endeavor, but it's hard work and requires relentless discipline. To succeed, you have to stick to your rules and avoid emotion―and you have to patiently wait to take only the best trades. Understanding, and utilizing, the information found in Trading Price Action Trading Ranges is the next logical step to achieving this goal. With this guide, and the other two books in the series, you'll discover how to develop the patience and discipline to follow a sound system, and reap potentially huge financial rewards in the process.

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Trading Price Action Trading Ranges

Technical Analysis of Price Charts Bar by Bar for the Serious TraderBy Al Brooks

John Wiley & Sons

Copyright © 2012 John Wiley & Sons, Ltd
All right reserved.
ISBN: 978-1-1180-6667-6

Chapter One

Breakouts: Transitioning into a New Trend

The market is always trying to break out, and then the market tries to make every breakout fail. This is the most fundamental aspect of all trading and is at the heart of everything that we do. One of the most important skills that a trader can acquire is the ability to reliably determine when a breakout will succeed or fail (creating a reversal). Remember, every trend bar is a breakout, and there are buyers and sellers at the top and bottom of every bull and bear trend bar, no matter how strong the bar appears. Since every trend bar is a breakout and trend bars are common, traders must understand that they have to be assessing every few bars all day long whether a breakout will continue or fail and then reverse. This is the most fundamental concept in trading, and it is crucial to a trader's financial success to understand it. A breakout of anything is the same. Even a climactic reversal like a V bottom is simply a breakout and then a failed breakout. There are traders placing trades based on the belief that the breakout will succeed, and other traders placing trades in the opposite direction, betting it will fail. The better traders become at assessing whether a breakout will succeed or fail, the better positioned they are to make a living as a trader. Will the breakout succeed? If yes, then look to trade in that direction. If no (and become a failed breakout, which is a reversal), then look to trade in the opposite direction. All trading comes down to this decision.

Breakout is a misleading term because out implies that it refers only to a market attempting to transition from a trading range into a trend, but it can also be a buy or sell climax attempting to reverse into a trend in the opposite direction. The most important thing to understand about breakouts is that most breakouts fail. There is a strong propensity for the market to continue what it has been doing, and therefore there is a strong resistance to change. Just as most attempts to end a trend fail, most attempts to end a trading range and begin a trend also fail.

A breakout is simply a move beyond some prior point of significance such as a trend line or a prior high or low, including the high or low of the previous bar. That point becomes the breakout point, and if the market later comes back to test that point, the pullback is the breakout test (a breakout pullback that reaches the area of the breakout point). The space between the breakout point and the breakout test is the breakout gap. A significant breakout, one that makes the always-in position clearly long or short and is likely to have follow-through for at least several bars, almost always appears as a relatively large trend bar without significant tails. "Always in" is discussed in detail in the third book, and it means that if you had to be in the market at all times, either long or short, the always-in position is whatever your current position is. The breakout is an attempt by the market either to reverse the trend or to move from a trading range into a new trend. Whenever the market is in a trading range, it should be considered to be in breakout mode. There is two-sided trading until one side gives up and the market becomes heavily one-sided, creating a spike that becomes a breakout. All breakouts are spikes and can be made up of one or several consecutive trend bars. Breakouts of one type or another are very common and occur as often as every few bars on every chart. As is discussed in Chapter 6 on gaps, all breakouts are functionally equivalent to gaps, and since every trend bar is a breakout (and also a spike and a climax), it is also a gap. Many breakouts are easily overlooked, and any single one may be breaking out of many things at one time. Sometimes the market will have setups in both directions and is therefore in breakout mode; this is sometimes referred to as being in an inflection area. Traders will be ready to enter in the direction of the breakout in either direction. Because breakouts are one of the most common features of every chart, it is imperative to understand them, their follow-through, and their failure.

The high of the prior bar is usually a swing high on some lower time frame chart, so if the market moves above the high of the prior bar, it is breaking above a lower time frame swing high. Also, when the market breaks above a prior swing high on the current chart, that high is simply the high of the prior bar on some higher time frame chart. The same is true for the low of the prior bar. It is usually a swing low on a lower time frame chart, and any swing low on the current chart is usually just the low of the prior bar on a higher time frame chart.

It is important to distinguish a breakout into a new trend from a breakout of a small trading range within a larger trading range. For example, if the chart on your screen is in a trading range, and the market breaks above a small trading range in the bottom half of the screen, most traders will assume that the market is still within the larger trading range, and not yet in a bull trend. The market might simply be forming a buy vacuum test of the top of the larger trading range. Because of this, smart traders will not buy the closes of the strong bull trend bars near the top of the screen. In fact, many will sell out of their longs to take profits and others will short them, expecting the breakout attempt to fail. Similarly, even though buying a high 1 setup in strong bull spike can be a great trade, it is great only in a bull trend, not at the top of a trading range, where most breakout attempts will fail. In general, if there is a strong bull breakout, but it is still below the high of the bars on the left half of the screen, make sure that the there is a strong trend reversal underway before looking to buy near the top of the spike. If you believe that the market might still be within a trading range, only consider buying pullbacks, instead of looking to buy near the top of the spike.

Big traders don't hesitate to enter a trend during its spike phase, because they expect significant follow-through, even if there is a pullback immediately after their entry. If a pullback occurs, they increase the size of their position. For example, if there is a strong bull breakout lasting several bars, more and more institutions become convinced that the market has become always-in long with each new higher tick, and as they become convinced that the market will go higher, they start buying, and they press the trades by buying more as the market continues to rise. This makes the spike grow very quickly. They have many ways to enter, like buying at the market, buying a one- or two-tick pullback, buying above the prior bar on a stop, or buying on a breakout above a prior swing high. It does not matter how they get in, because their focus is to get at least a small position on, and then look to buy more as the market moves higher or if it pulls back. Because they will add on as the market goes higher, the spike can extend for many bars. A beginning trader sees the growing spike and wonders how anyone could be buying at the top of such a huge move. What they don't understand is that the institutions are so confident that the market will soon be higher that they will buy all of the way up, because they don't want to miss the move while waiting for a pullback...

Details zur Ausgabe

• Verlag: Wiley
• Erscheinungsdatum: 2012
• Sprache: Englisch
• ISBN 10: 1118066677
• ISBN 13: 9781118066676
• Einband: Gebundene Ausgabe
• Auflage: 1
• Anzahl der Seiten: 624
• Kontakt zum Hersteller: Wiley-VCH GmbH; product_safety@wiley.com; ; Boschstrasse 12; Weinheim; 69469; Deutschland