{"id":46532,"date":"2015-12-06T01:11:45","date_gmt":"2015-12-06T09:11:45","guid":{"rendered":"https:\/\/brookstradingcourse.com\/?p=46532"},"modified":"2018-03-25T02:50:16","modified_gmt":"2018-03-25T09:50:16","slug":"breakout-pullbacks-trading-4-point-stop-for-1-point-scalp","status":"publish","type":"post","link":"https:\/\/www.brookstradingcourse.com\/pt-br\/ask-al\/breakout-pullbacks-trading-4-point-stop-for-1-point-scalp\/","title":{"rendered":"Ask Al: Breakout pullbacks trading 4 point stop for 1 point scalp"},"content":{"rendered":"<h2>BPA trading room Q&amp;A: September 4, 2015<\/h2>\n<p class=\"content-box-green\">I trade breakout pullbacks. I always need three or four-point stops to make one to two points. Is that acceptable?<\/p>\n<p><em>Video duration: 5min 13sec<\/em><\/p>\n<div style='position:relative;height:0;padding-bottom:56.25%'><iframe class='sproutvideo-player' src='\/\/videos.sproutvideo.com\/embed\/e89adfbb1319eec460\/3ba70864ba7a1988?playerTheme=dark&amp;playerColor=' style='position:absolute;width:100%;height:100%;left:0;top:0' frameborder='0' allowfullscreen><\/iframe><\/div>\n<p><\/p>\n<p class=\"caption\">You can also view this video on <a href=\"https:\/\/youtu.be\/uu2GuW325Jo\" target=\"_blank\" rel=\"noopener\">Al&#8217;s YouTube Channel<\/a> if needed.<\/p>\n<h2>Video transcript<\/h2>\n<h3>Scalping breakout pullbacks with wide stops<\/h3>\n<p><a href=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/12\/150904-ask-al-36-buying-low-scaling-in.png\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/12\/150904-ask-al-36-buying-low-scaling-in-300x239.png\" alt=\"Ask Al 36 Buying Low Scaling In\" width=\"300\" height=\"239\" class=\"alignleft size-medium wp-image-46602\" title=\"\" srcset=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/12\/150904-ask-al-36-buying-low-scaling-in-300x239.png 300w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/12\/150904-ask-al-36-buying-low-scaling-in-600x477.png 600w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/12\/150904-ask-al-36-buying-low-scaling-in.png 900w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>I do that all the time. So can you use a four-point stop to make a one-point scalp? On most days, if the days\u2019 range is 40 points, you\u2019re not going to do it. But if the range is 10 points, sometimes 20 points, and we\u2019re in a fairly quiet trading range part of a 20-point day, sometimes I will risk four points to make one point but only if I\u2019m willing to scale in. So for example, let\u2019s say I placed a limit order to buy the 6 low, I\u2019m probably not going to get my one-point profit right away; I\u2019m probably going to buy more one point lower and probably going to use a five or six-point stop.<\/p>\n<p>What do you know about <a href=\"\/how-to-trade-manual\/traders-equation\/\" target=\"_blank\">probability<\/a>? When you ask that question, you know something. You\u2019re saying, \u201cCan I make a one-point scalp using a four-point stop?\u201d Immediately, what are you saying? There are always three variables and you just gave two of them. You said big risk, small reward. So you automatically know probability. Anytime you have small reward, big risk, you have a bad risk reward ratio where your risk is much bigger than your reward. That\u2019s a terrible risk\/reward ratio. If you have a terrible risk\/reward ratio, you know that the probability has to be high, right, because the guy on the other side cannot have everything going his way. So anytime you\u2019re using a wide stop, your probability\u2019s going to be high, but your wide stop means that you\u2019re risking a lot so if you use a wide enough stop, you can pretty much buy any day and make money, and you can pretty much sell any day and make money. If you use a 100-point stop, and you buy at any point and then scale in 20, 30, or 40 points lower, you\u2019re almost certainly going to make money. You\u2019re going to make money probably 80 percent of the time, but occasionally &#8212; maybe 10 or 20 percent of the time &#8212; you\u2019re going to lose 100 points, but the math is okay.<\/p>\n<h3>Experience and comfort needed for scaling in<\/h3>\n<p>But back to your question, \u201cIs it okay to risk four points to make one point?\u201d Only if you\u2019re not going to scale in, if you have to be right 90 percent of the time or else it\u2019s a losing strategy, and really good traders I know &#8212; I\u2019ve traded with a bunch of traders who win 90 percent of the time, scalpers who win 90 percent of the time so it can be done. But if you\u2019re starting out, that is not what you should be doing because you are not going to be winning 90 percent of the time. And also, you should not be scaling in. However, if you start getting some experience and some comfort and you can trade small enough so that you\u2019re perfectly comfortable scaling in, then you can do that. But you got to make sure that you\u2019re reading the market cycle correctly. You don\u2019t want to be buying in a really tight channel bear trend because if you look at the 15-minute chart and you say, \u201cWait a minute, on the five-minute chart it\u2019s a bear channel, but on the 15-minute chart it\u2019s a bear breakout. Every bar is closing on its low.\u201d So you have to make sure that you\u2019re assessing the market correctly &#8212; which is easier, in hindsight, but that\u2019s really key if you\u2019re going to be taking a small profit\/big risk trades, and especially if you\u2019re scaling in. You have to really know what you\u2019re doing and you have to be really comfortable with what you\u2019re doing.<\/p>\n<p>A lot of times, maybe I can find you an example of something here. I\u2019m looking for one specific thing that happens fairly often, and because I\u2019m saying it happens fairly often it\u2019s going to be hard to find. What I\u2019m looking for is a reasonable buy. This is really &#8212; this is kind of an example of it, but it\u2019s not a very good example of it. But let\u2019s say 36 is a great-looking buy; bulls will buy the high, they\u2019ll use a very wide stop, and they\u2019re willing to scale in. They don\u2019t make a profit and immediately break strongly to the downside. They\u2019ll buy more on the reversal up. And if this is a reasonable buy and the context is good and the signal bar is decent, buying that reversal up and getting out breakeven is a logical strategy. Even if you have a breakout like this &#8212; a five bar bear breakout. So to me, if I\u2019m trading a <a href=\"https:\/\/en.wikipedia.org\/wiki\/Investment_fund\" target=\"_blank\" rel=\"noopener\">fund<\/a> and 36 looked like a pretty good buy, I would either buy 36 and then buy the reversal up above 44 or 45, or not buy 36 and then when I get down here I\u2019m thinking the scale-in bulls will buy and we\u2019ll get back to that high so I\u2019ll buy the reversal up. So that\u2019s the kind of thing that I\u2019m talking about.<\/p>\n<h3>Good read on market cycle also needed<\/h3>\n<p>If you have enough experience and you\u2019re pretty confident, and you read of what the market cycle is doing, what the price action is doing, then you can do that, but if you get very stressed out and very upset, and very worried as you get four of five bar breakout against you, obviously you should not be doing that; not only because you\u2019ll mess up and not make money, more importantly, you got to like your job, right, and if you\u2019re stressing out and feeling really miserable, and unhappy, and tense, that\u2019s not fun. You don\u2019t want to do that.<\/p>\n<p><em>Al Brooks<\/em><\/p>\n<p><a title=\"Al Brooks&#039; trading room\" href=\"https:\/\/www.brookstradingcourse.com\/online-day-trading-room\/\">Information on Al&#8217;s Online day trading room<\/a><\/p>\n<hr \/>\n","protected":false},"excerpt":{"rendered":"<p>BPA trading room Q&amp;A: September 4, 2015 I trade breakout pullbacks. I always need three or four-point stops to make one to two points. Is that acceptable? Video duration: 5min 13sec You can also view this video on Al&#8217;s YouTube Channel if needed. Video transcript Scalping breakout pullbacks with wide stops I do that all [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[159],"tags":[],"class_list":{"0":"post-46532","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-ask-al","7":"entry","8":"has-post-thumbnail","9":"override"},"featured_image_src":null,"author_info":{"display_name":"BTC Admin","author_link":"https:\/\/www.brookstradingcourse.com\/pt-br\/author\/richardhk\/"},"_links":{"self":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts\/46532","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/comments?post=46532"}],"version-history":[{"count":0,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts\/46532\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/media?parent=46532"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/categories?post=46532"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/tags?post=46532"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}