Trading Price Action Trends: Technical Analysis of Price Charts Bar by Bar for the Serious Trader (Wiley Trading)
A practical guide to profiting from institutional trading trendsThe key to being a successful trader is finding a system that works and sticking with it. Author Al Brooks has done just that. By simplifying his trading system and trading only 5-minute price charts he’s found a way to capture profits regardless of market direction or economic climate. His first book, Reading Price Charts Bar by Bar, offered an informative examination of his system, but it didn’t allow him to get into the real nuts
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Preliminary assessment,
I have had the book for a month, but I have decided to already post a preliminary review. This is because I don’t expect to be through the book for another year (and it is not because I am lazy). So rather than wait, here are my thoughts.
The author is mainly trading the stock market indices using 5 min bar charts. You don’t need to have exactly the same focus, but it should be fairly close for you to get full value of the book. He uses candlestick charts, but this book is not about candles. One way of thinking about it is that candlesticks are static and the author is more focused on how the chart develops dynamically over the day. So in an way both similar and different to standard candlestick interpretation. The author tries to explain the underlying mechanisms generating certain price patterns. This is interesting. One could question the mechanisms, but ultimately I think the book adds value in this regards. Hopefully we will see more of this in future books about the market. The book also has detailed discussions of individual charts, which I find very useful to understand how the author analyses a chart.
I have earlier bought the author’s Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader (Wiley Trading) and found it interesting, but totally confusing to read (and I don’t care about grammar mistakes). Even though the current book isn’t labelled as a second edition on amazon, you should consider it a second edition of the 2009 book. The author has clearly put a lot of extra effort into this book to make it more understandable compared to the 2009 book. If I compare the two books, I would say that the second edition passes the readability mark, but it still has problems. So you should be aware that the book is not an easy read. It is dense and requires a lot of study together with your own charts. Trading style is a lot about personal psychology, but if you think your personality would fit with day trading and serious study, it would be hard find a more suitable book. This conclusion probably also mean that most people will not have enough patience with this book.
The first edition of this book received a lot of (rightful) critique because it was poorly written. I doubt there will be a third edition, but there is room for improvement: 1. Each chapter introduces new ideas in text format without any charts. Subsequently, we get lots of chart illustrations in the second half of the chapter. It would have been extremely helpful to also have some figures to illustrate the concepts (like a stylised chart with just a few bars). Trying to understand a new concept by just reading continuous text is not efficient. 2. Partly for the same reason the book is unnecessarily wordy. However, it is also wordy because many sections are repetitive. 3. It would have been nice to have a lot of the text in footnotes. I agree with the author that additional comments add value, but if they were in footnotes it would have been much easier for the reader to distinguish between core points and additional points. This holds true both for the continuous text and the comments to the charts. 4. The author is too cavalier in stating that his approach applies to all markets. Take forex for instance. That market is clearly more driven by news, there is more daily volatility and trading is 24 hours. These are factors that has to be incorporated in a price action perspective on forex.
I have still given this book five stars because (1) it is a successful trader’s serious attempt to explain his own methodology and (2) it is a rewritten second edition so it is an improved version of the author’s thinking. Before you buy you might also want to browse the author’s website if you want more information. Naturally there is no trading book that you can just read, apply and make money from. With this book you need a lot of study.
The book is part one of a three volume set. The books are not really free-standing and the author often refers to volume 2 in the text. So do not expect to get the approach without buying the other volumes too.
Finally, it seems that the author’s booked open a new area of study. Well, not totally new, but the focus on the daily movements did not exist in trading books a couple of years ago. Another quite interesting book is Forex Price Action Scalping: an in-depth look into the field of professional scalping, which turned out to me much better than expected. That book “kind of” uses one minute charts. It might actually be a good idea to buy that book first because it is better written and much shorter.
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|Second time around,
First off let me say that I am a Brooks devotee. I have had his first book for about a year, read it cover to cover 4 times, and have sifted out over 500 individual bullet points to memorize. I’ve easily spent over a 1000 hours studying his methods so this new expanded 1st edition of three was a must buy.
The book itself is wider than his first book and there is a margin for plenty of notes. Also, there are many pages half filled with text that leave more space for notes. The material is definitely expanded upon compared to his first book although I thought the first book covered his methods in a very comprehensive way. I have read 5 or so chapters of this new book so far and I do think the writing is easier to get through over the first book. However, the ideas and methods require a lot of thought and attention to detail and that is just the way it is.
I thought Al’s statement in the intro was so lucid and succinct when he said he was giving you everything you’d need to make a living at trading, but it’s up to you to spend the countless hours to learn your trade. He likened it to learning to play the violin. How many hours you might ask? In my mind that number is 3000 hours, study and screen time, and some would say that number is too low. Trust me when I say if you want a quick “secret” to somehow shortcut the countless hours of elbow grease that any profession would require to become proficient in than you will flip through this book and be overwhelmed by its depth or unimpressed by its lack of ease. If however you are committed to becoming a trader and know that the road to success will only come through study, persistence and the discovery of ability that comes from hard work over much time then rejoice for you have found a true guide.
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|Obfuscation, Review & Errata of Trading Price Action TRENDS,
I am about 150 pages into the book so far as of 2012-03-10 and after getting used to my eyes bleeding in the first 70 pages I am finally starting to settle into his writing style. Believe me, if I knew of any other competent book on the subject of trading price action, I would not have continued to muddle through this one. If you have ever heard one of Al Brook’s webinars like those posted at Big Mike Trading (google “big mike trading al brooks webinar you tube”) you will see that he has managed to perfectly capture all of the boredom and monotone of his voice in print form. Fine, so he isn’t a skilled orator, nor a clear wordsmith, BUT there is a lot of great information in the book that is very valuable to a trader.
Just from reading a small blurb ,on page 110, about how a very large trending bar in context of a dying trend is more likely to represent a climactic exhaustion (a buy climax)rather than another continuing leg in the current trend’s direction, I have found myself capitalizing by closing trades at the close of that bar, locking in profits instead of waiting for something more and giving it all back especially when trading around economic news releases.
Pay particular attention to the introduction pages 26-33. Brooks gives you basically the entire outline of all three books right here with bullet points as to:
– characteristics that are commonly found in strong trends
– characteristics that a bull-breakout will be strong
– characteristics that a bear breakout will be strong
– characteristics of the best bull reversal bars
– characteristics of the best bear reversal bars
– characteristics common in strong bull reversals
– characteristics common in strong bear reversals
The trilogy provides more insight into these characteristics with examples.
Brook’s primarily refers to 5 minute ES charts, although references 15-minute charts for confirmation of more pronounced trends on the higher timeframe, and also refers to 100-tick ES charts.
While Brook’s has a mostly complete of terms he uses in his book, pages xiii-xxvii, he noticeably leaves out definitions/examples of bull flags, bear flags, and final flags. You will have to google those for yourself.
One gripe is the the explicit stated desire of the Author not to be bothered in correcting errors. Unfortunately, Wiley seems to be taking the same approach to the problem, so as I continue through the book, I will update the review with errors I have found in the book. I can incorporate other errors reported in comments to this review so that they are all in one fairly high trafficked place.
Obfuscation
Page 56 – The chart in Figure 1.1 is annotated completely wrong with respect to the narrative text found below the chart. He labels an ABC move but refers to an AB-CD. The text calls bar 2 point C (labeled as B on the chart), bar 3 as point D (which is labeled as point C on the chart.) There is no point D labeled on the chart. The author should have labeled his nonstandard points as A*, B*, C*, D* to enable the reader to keep more of his own hair.
Errata
Page 117 – Figure 6.4 the bar not numbered occurring at 7:30 on the 15-minute chart should be labeled bar 4 and the bar incorrectly labeled “bar 4” on the 15-minute chart should be labelled as bar 5 to properly correspond to bar 5 on the 5-minute chart. The last sentence on the page clearly refers to the “bar 4” labeled on the 5-minute chart
I will add more errata as I find them or as comments on this review dictate.
As a final independent reference, this book tested out at an LoC of 210, the same as the previous book. The LoC does rise to 220 in “Trading Ranges” and 240 in “Reversals.” The Forex Price Action Scalping book calibrates at LoC 270.
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