Trading Price Action Reversals

"A trend doesn't last forever and it transitions into either a trend in the opposite direction or into a trading range. When a trend reaches some critical magnet, it stalls and starts to pullback. If the pullback extends too far, traders do not know if the trend will resume or if the market will reverse and then trend in the opposite direction. Because the market often goes very far after a reversal takes place and the protective stop can be very small, the risk reward ratio is excellent and this keeps traders looking for them constantly. There are many types of reversals and each has specific characteristics that traders can use in their trading. There are several other important topics that need to be discussed and they are included in this volume. Price action analysis works on all time frames but there are different techniques that traders can use in trading intraday, daily, weekly and monthly charts. For example, a day trader can use an always in approach where he is in the market all day long, switching to long or short depending on the price action. Many markets now trade on the Globex almost 24 hours a day and the Forex is also a 24 hour market. Both provide trading opportunities. The first hour of the day session of every market provides some ofthe best trading of the day if you understand how to handle the volatility and why the sharp reversals are taking place. Options are also great tools for trading 60 minute and daily charts because they contain your risk on overnight positions. Even though there are countless setups some are better than others and these are discussed in the chapter on the best trades. The book ends with many general guidelines that will help traders handle the emotions that come while trading. "--

Auteur

AL BROOKS is a technical analysis contributor for Futures magazine and an independent day trader. His approach to reading price charts was devel-oped 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.

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Praise for Trading Price Action Reversals

"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 guide-lines, he has allowed basic common sense to once again rule how real traders should approach themarket. 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 more than 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; provided important insights on trading ranges, breakouts, order management, and the mathematics of trading in the next book, Trading Price Action TRADING RANGES; and now moves on to discuss trend reversals, day trading, daily charts, options, and the best setups for all time frames in this third, and final, book of the series, Trading Price Action REVERSALS.

Page by page, Brooks skillfully addresses how to spot and profit from trend reversals?which offer an excellent risk-reward ratio?using the technical analysis of price action. Along the way, he touches on some of the most essential aspects of this approach as well as several other important topics, including the various types of reversals, successfully trading the opening range of a day session, price action setups that new traders should focus on, 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.

Résumé
A detailed guide to profiting from trend reversals using the technical analysis of price action The key to being a successful trader is finding a system that works and sticking with it. Author Al Brooks has done just that.

Contenu

Acknowledgments xi List of Terms Used in This Book xiii

Introduction 1

PART I Trend Reversals: A Trend Becoming an Opposite Trend 35

CHAPTER 1 Example of How to Trade a Reversal 73

CHAPTER 2 Signs of Strength in a Reversal 79

CHAPTER 3 Major Trend Reversal 83

CHAPTER 4 Climactic Reversals: A Spike Followed by a Spike in the Opposite Direction 111

CHAPTER 5 Wedges and Other Three-Push Reversal Patterns 151

CHAPTER 6 Expanding Triangles 181

CHAPTER 7 Final Flags 189

CHAPTER 8 Double Top and Bottom Pullbacks 217

CHAPTER 9 Failures 225

CHAPTER 10 Huge Volume Reversals on Daily Charts 257

PART II Day Trading 261

CHAPTER 11 Key Times of the Day 263

CHAPTER 12 Markets 271

CHAPTER 13 Time Frames and Chart Types 273

CHAPTER 14 Globex, Premarket, Postmarket, and Overnight Market 287

CHAPTER 15 Always In 293

CHAPTER 16 Extreme Scalping 317

PART III The First Hour (The Opening Range) 331

CHAPTER 17 Patterns Related to the Premarket 353

CHAPTER 18 Patterns Related to Yesterday: Breakouts, Breakout Pullbacks, and Failed Breakouts 357

CHAPTER 19 Opening Patterns and Reversals 373

CHAPTER 20 Gap Openings: Reversals and Continuations 395

PART IV Putting It All Together 401

CHAPTER 21 Detailed Day Trading Examples 403

CHAPTER 22 Daily, Weekly, and Monthly Charts 415

CHAPTER 23 Options 431

CHAPTER 24 The Best Trades: Putting It All Together 455

CHAPTER 25 Trading Guidelines 527

About the Author 541

About the Website 543

Index 545