Aug 302011
 

Today is our last day and I’ve been reading some of Al Brook’s book at the beach. I first read it over a year ago and I guess I wasn’t ready for it then as it makes a lot more sense now.  I think he goes overboard with his patterns and analysis but I’m picking up some good information here and there, and that makes a second read worthwhile.  Actually I must admit I didn’t succeed in reading 100% of it the first time. <grin>

One thing has me thinking:  He says to take half off at +1 pt and swing the other half with a breakeven stop.  That’s what I was doing before but lately I’ve been going for 2:1 ratio on my first scale.  It’s too early to know which is best so this is something I plan to keep track of.

I like what he says about counter-trend:  Don’t do it until after a major trendline break with momentum and a retest of the high/low.  That would keep me out of trouble and is in line with my recent attempts to avoid fading.

I also like what he says about going for 1 pt/day and increasing size.  I’ve been working on increasing my profit and reducing risk.  Maybe I’m going for too much?  1 pt/day doesn’t seem that hard.

I think I’m done for the day as it’s time to go back to the beach one last time.  Traded “ok” today.

I made 924 euros while on vacation, without any losing days.  I’m very happy with that as I traded less than a couple hours/day when the kids were resting.  It didn’t interfere with our vacation and it kept me in tune with the markets.  Trading only a few hours/day a few days/week was a nice relief from the 8+ hrs/day I usually do.  I plan to trade a little less when we return and spend more time on exercise and hobbies.  I think it’s much easier to focus when trading only a few hours at a time.

Tomorrow we drive back, a grueling 8.5 hour drive which with kids takes about 12 hours, especially if we stop and visit on the way.  So I’ll be back on Thursday.

 

  3 Responses to “Reading Al Brook’s at the beach”

  1. I will be interested in what you decide here. I trade two contracts in the ES. This is something that I go back and forth with in my trading. I usually let my first contract go at one point and let the other sit at BE -3. In my mind I have a free trade and it takes the pressure off. The downside though is you can’t scale at important levels as the position moves in your favor and your all or nothing on the last one. It’s a good topic for discussion. Thanks for the bog and nice work on the trading while on vacation.

  2. Paul – Thanks for sharing, this is my delima as well. Every time I take a quick first scale, I regret it when I need to scale later and I only have one left. So I have to either get out potentially way early, or stay in and risk giving it all back. Trading 3 would definitely help.

    For now, I think I want to try to get 2:1 ratio and if I need to scale quicker I will but I want it to be based on a need. Such as if I’m long and price can’t break past a level.

    Al says the 1 pt scale is a high probability trade and you need 67% win rate (assuming 2 pt stop) but he says if you get a big winner then it makes up for it. But my question is if we’re dependent on big winners then why scale at 1 pt at all? In one part of the book he does mention not going for a scalp and scaling out 1/3 to 1/2 at 2* risk. So from that I gather he has more reliable setups that he swings more and he has less reliable “scalp” setups. So it really depends on the setup.

    In any case, scaling at 2 pts when the stop is 2 pts is not that bad as long as the win rate is > 50% and of course the 2nd half can get 4 pts or more so that would lower the minimum win rate even more. I know Barry of eminiwatch goes for 4 pts on his trades and when he gets 4 he usually stops. Maybe going for more is greedy? scaling at 2 & 4 could be quite profitable.

    An example is a few weeks ago I went for a gap fill and got it and got over 10 pts on it. So scaling at 2 or 4 on that trade would have been a bad idea. But honestly those types of setups are not that common for me. I can’t go for 10 the majority of the time.

    Those are my thoughts, I’m still struggling with this. I’ll be experimenting over the next few weeks. Today I had two trades go 1-1.5 pts and then reverse on me and I scratched them. And the third trade went +1 pt and then negative a few ticks and then hit my 2 pt target. So it will take some experimenting and journaling to find out what would work best.

    In any case, I think it’d be easier with 3 contracts so I want to work up to that real soon.

  3. Hey Michael,

    Thats exactly where im at right now in my trading also, my daily goal per day is 500$ which trading a 2 lot is around 10 points.. now it seems dramatically easier if I just traded and aimed for 5 points total for the day and more size, seems like my day would end a lot quicker.. FT says he aims for 2-3 points out of every trade and he is very modest with his targets. but 2 of those trades a day makes a really good day. In the recent volatility a 2 pt first scale out was fairly easy to achieve but in the last 2 days where things have settled down it seems like that’s not always the case any more. my ideal goal would be to get up to a 10-20 lot and make 2-3 points a day, who wouldnt be happy with a nice 2-3k a day consistently :p

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