Student Trader

Most of these are from Al Brooks:

• Pause Bar = Breakout Mode
• Spike and Channel patterns usually have lots of failed reversals.
• After a big (bear) move, if the (bull) reaction is overlapping, horizontal, and large-barred / tailed, the original (bear) move will likely continue.
• Doji’s are areas of indecision, not strength. Generally, you don’t want to buy above a small doji or sell beneath one.
• In a doji range / final flag formation, look for the first BO to fail. Usually, you get a FF FBO reversal this way.
• After a Lower Low test, expect two legs up. If the test only resulted in a Higher Low, expect only one leg. Vice Versa for highs: HH – 2 legs down, LH – 1 leg down.
• L4’s and H4’s are almost always high – probability scalps.
• Swing Highs / Lows, TL BO’s, etc. are opportunities to enter on a failure, unless there is a particularly strong trend. This is especially true on a nice small bar on a H2 or L2.
• New Highs / Lows in Range Days Usually Reverse
• Big Trend Bar Breakouts of Swing Highs / Lows on Trading Range Days are usually traps.
• When a big Trend Bar comes out of a Barb Wire pattern, it is often a trap and will often reverse.
• Expect two legs down from a failed H2, especially at the open.
• Areas of two-sided trading are strong magnets.
• Large Gap = Increased Probability of T1B = Swing / Small Gap = Scalp for a test of the COY or EMA.
• ioi Pattern = usually you can trade a BO of the second IB.
• Don’t trade the first BO of a channel. Look for it to fail.
• Outside Down bars that BO below a swing low usually have a second leg down.
• Generally, the trade is stronger if the Signal Bar is in the direction of the planned trade.
• H2’s / L2’s in channels are weaker than normal.
• Doji entry bars are never good. Consider exiting at the market. And Doji signal bars should be avoided.
• A very strong bar with a strong close is often reason enough for at least a scalp, provided the entry is not too high / low in the range. Major BO bars like this work very well, but the risk is higher.
• After very strong bars (that are NOT CLIMAXES) look to buy PB’s of a point to several points (ES pts) and all H1’s / H2’s on 1-min and 2-min charts.
• Bear TB’s at the Top of / Bull TB’s at the Bottom of Trading Ranges are good for a scalp at least.
• In a tight trading range, expect the first BO to fail. If the range is wider and has three distinct legs, wedge may be developing and that interpretation may dominate the action.
• When you get a thin area on the chart because of a BO, that thin area is often the basis for a Measured Move in that direction.