{"id":93738,"date":"2019-09-29T01:16:37","date_gmt":"2019-09-29T08:16:37","guid":{"rendered":"https:\/\/brookstradingcourse.com\/?p=93738"},"modified":"2024-07-18T06:07:15","modified_gmt":"2024-07-18T13:07:15","slug":"full-trading-room-qa-session","status":"publish","type":"post","link":"https:\/\/www.brookstradingcourse.com\/pt-br\/ask-al\/full-trading-room-qa-session\/","title":{"rendered":"Ask Al: Full trading room Q&A session"},"content":{"rendered":"\n

Closing questions BPA trading room Q&A: September 3, 2019<\/h2>\n\n\n\n
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Question: \u201cWhen you became consistently profitable, did people give you a hard time about trading as a career?\u201d
Video duration: 15min 36sec<\/em><\/p>\n\n\n\n<!–

You can also view this video on Al’s YouTube Channel<\/a> if needed.<\/p>\n–>\n\n\n\n

You\u2019re a young guy, if you\u2019re around in the \u201980s and \u201990s. Day traders, they were shamed. Back then, institutional traders ruled the world, and they were popping up on television all the time, talking about basically \u201clowlife scum day traders.\u201d I think the problem was they saw that they were losing control over the market. They could no longer steal from people. The market was becoming much more electronic. They were in denial, not wanting to believe that high frequency traders would rule the world and really good day traders would rule the world.<\/p>\n\n\n\n

So\n60 Minutes<\/em> did stories on day trading. It was in the news a lot. A lot\nof day traders were basically casino-type players, gamblers, back in the \u201990s\nwhen day trading started to become fashionable. I think there was a sense of\nshame about being a day trader.<\/p>\n\n\n\n

When\npeople would ask me what I did, I would just look them in the eye and say \u201cI\u2019m\na day trader\u201d and I would let them think that I was an idiot. I\u2019d just smile,\nbecause in my mind, anybody who\u2019s making an honest living is doing something\ngood, and if they\u2019re doing it well, they deserve admiration and respect and not\ncondemnation.<\/p>\n\n\n\n

Sometimes\nmy friends, well occasional friend will say something like \u201cAl, you don\u2019t do\nanything purposeful. You\u2019re not making the world any better. You\u2019re a smart,\ncapable guy, and you\u2019re choosing to be selfish and not contribute to the\nworld.\u201d My answer is \u2013 well, my job, you can call me a day trader, but you can\nalso call me a liquidity provider, as you can call any high frequency person,\nhigh frequency trading person or high frequency trading fund.<\/p>\n\n\n\n

If you get rid of all the high frequency trading<\/a> \u2013 day traders or machines \u2013 the volume would probably be 70% less than what it is now. What will happen if you try to sell your house and you get rid of three-quarters of all the potential buyers? What\u2019s going to happen to your sale price? You\u2019ll have far fewer people bidding to buy your house. The bid\/ask spread between what they want to buy and where you want to sell is going to be big, and you\u2019ll probably just sell somewhere in the middle, which is probably far below where you want to sell.<\/p>\n\n\n\n

As\na liquidity provider, I\u2019m just a little guy, right? But if you add tens of\nthousands of people like me and several hundred high frequency trading firms,\nwe provide a tremendous amount of liquidity. And the result is the bid\/ask\nspreads are very tight. Usually in the Emini, only 1 tick, and since they\u2019re\nhighly arbitraged with all the stocks, stock trading also has very tight\nbid\/ask spreads. That is because there are a lot of trades taking place, and\nthe majority, the vast majority of the trades are high frequency trading firms\nand day traders.<\/p>\n\n\n\n

So\nI am making a contribution to the world\u2019s economy. It may be a tiny\ncontribution, but what I\u2019m doing is important, and because a lot of people do\nit and a lot of machines do it, everybody, even investors who might take a\ntrade once every 6 months or every year, get a better price, a better fill.<\/p>\n\n\n\n

One\ncommon comment was, \u201cAl, you\u2019re making a million dollars a year as an eye\nsurgeon. Why did you ever give it up?\u201d<\/p>\n\n\n\n

I say, yeah, I grew up poor<\/a>. My mother didn\u2019t go to college. Nobody in the family went to college. She told me to become an eye surgeon. I never thought twice about it. My mom wants me to be an eye surgeon, I\u2019m going to become an eye surgeon. So I never paid any attention to what I might want to do. My mother wanted me to be an eye surgeon, so I became an eye surgeon.<\/p>\n\n\n\n

At\nsome point in my life I decided that I have one life to live, and the most\nimportant thing I can do in this world is be the best me I can be, and being an\neye surgeon was not being the best me I could be. So I decided to figure out\nwhat I wanted to do, and I decided to trade, and I really like day trading.<\/p>\n\n\n\n

So\nI\u2019ve been doing that ever since, I\u2019m proud of it. I\u2019m not embarrassed. In my\nmind, what I do is positive. It helps the world economy \u2013 in a small way, but\nif you put tens of thousands of people like me together, it becomes a\nsignificant part of the world economy. We tighten the bid\/ask spreads for\neverybody. So it makes markets fairer and makes transactions easier. There are\ngoing to be far more potential buyers and sellers if you want to do the opposite.<\/p>\n\n\n\n

Nowadays,\ninstead of criticizing me now, everybody\u2019s always asking me for advice. \u201cAl,\nshould I buy this? Should I sell that? How should I structure my portfolio?\nWhat kinds of distributions and assets?\u201d So it\u2019s really kind of funny.\nEverybody knows I\u2019m a day trader, but now nobody looks at me with scorn or\nmakes smart aleck comments. Instead, it\u2019s just the opposite. They\u2019re asking me\nfor advice.<\/p>\n\n\n\n

Back\nto the questions. <\/p>\n\n\n\n

Question: \u201cYou mentioned a few times some trades not good for small accounts. What size account do you consider small?\u201d<\/p>\n\n\n\n

He\nmentions a few times that some<\/a> trades are not good for small accounts. It\u2019s all\nrelative. It\u2019s pretty hard to trade if you have less than $3,000 to $5,000. But\nif you do have $3,000 to $5,000, you can trade micro Eminis and just go for 4\npoint trades. So once the market is 4 or 5 points below the open today, you\njust buy a single micro Emini and maybe put a stop 10 points below and just\nhold on until you get back here. I know you don\u2019t make a lot of money if it goes\nup 4 or 5 points, but at least you\u2019re learning how to trade.<\/p>\n\n\n\n

In\ngeneral, I think traders should try to risk no more than 1% or 2% of their\naccount when they\u2019re trading. If you have a smaller account, $10,000 or less,\nyou\u2019re probably going to have to risk 3% every now and then. So 3% of a $10,000\naccount is $300. If you are buying above a bar that\u2019s 10 points tall and you\nput your stop below, that\u2019s $500. You cannot take that trade, because then\nyou\u2019re risking 5%.<\/p>\n\n\n\n

So\nthink of it in terms of that way. If a trade requires you to risk more than 3%\nof your account, then your account is too small for that trade. If you can buy\ncalls or buy puts or buy or sell micro Eminis, and then have much less money at\nrisk, then you might be able to take your trade. So a risk of 5% in the Emini\nis a risk of 0.5% in a micro Emini, and therefore a trade that you might not be\nable to take with the Emini, you can take with the micro Emini.<\/p>\n\n\n\n

Question: \u201cOk, what are the rules that you use to \u2018trade stupid\u2019?\u201d<\/p>\n\n\n\n

I\ndon\u2019t have any specific rules, but in general, sometimes you\u2019ll hear me say\n\u201cjust trade stupid.\u201d You just turn your brain off, take the trade, use the\nappropriate stop even though it\u2019s far away, and then just sit there, hoping\nthat the market\u2019s going to go your way.<\/p>\n\n\n\n

Anywhere\non the way down here, especially once we\u2019ve broken above the bull Micro Channel\n\u2013 a \u201ctrade stupid\u201d type of trade would be just buy the market, put a stop below\nthe low of the day, go to Walmart. I have a limit order to get out at the open\nof the day so your reward is about the same as your risk, but the probability\nis 60% that you\u2019ll make your money before you get your stop hit.<\/p>\n\n\n\n

And\nwhen I say trade stupid, I mean don\u2019t overthink and don\u2019t look at too many\nthings. Don\u2019t go flipping around different timeframes, different markets \u2013\nNASDAQ, SPYDR, JP Morgan, Apple. Just look at the chart in front of you and\ndon\u2019t worry about all the things that you\u2019re not seeing.<\/p>\n\n\n\n

Even\nthough I might see 50 reasonable scalps on a typical chart like this, if I\nreally wanted to, I could flip around to different timeframes. I could have a\ngiant monitor with a 1-minute chart, 2-minute chart, 3-minute, 4, 5-minute, 10,\n15-minute chart. Then you could have tick charts. 1000 ticks, 2500 ticks, 5000\nticks. Volume charts. I could have range charts. I could have 15 different ways\nof looking at the Emini. Instead of having 50 setups a day, I could probably\nsee 100, 200 setups a day, even though there are only 81 bars on the Emini.<\/p>\n\n\n\n

To\nme, trading stupid is just looking at one chart and not worrying about anything\nelse. Just try to look for the setups here and then try to figure out if I can\nstructure a trade that makes sense mathematically. Will the trader\u2019s equation\nbe good? You\u2019ve got to deal with risk, reward, and probability. Is the\nprobability that you\u2019re going to make money times your reward greater than the\nprobability that you\u2019re going to lose money times your risk?<\/p>\n\n\n\n

I\nknow I\u2019m not really answering your question, but when I say trade stupid, I\nsimply mean don\u2019t overthink. You see where the buy is, you see where the stop\nis, you know where you\u2019re thinking the target is. Just take the trade, and if\nyou find yourself micromanaging it and exiting early, especially exiting early\nwith a loss, take the trade, put in your stop, put in your profit-taking order,\nOCO (one cancels the other), and go out and do an errand and come back in 30\nminutes or an hour or so.<\/p>\n\n\n\n

Question: \u201cIf you had sold the 21 close, how would you have managed the trade? What\u2019s the best strategy for trading in a triangle?\u201d<\/p>\n\n\n\n

Big range today. Let me go back to the first part. If you sold the triangle and close, what do you do? For me, if I sold that triangle and close \u2013 I would not have, but had I sold the triangle and close, you always hear me say, general rule. If you\u2019re short and you get a decent bull bar, you get out 1 tick above. So you could either \u2013 you\u2019ve got two ways of handling it. You sell the 21 close and either get out with a tight stop or a wide stop. The worst thing is a skunk stop<\/a> somewhere in between.<\/p>\n\n\n\n

\"Ask<\/a><\/figure><\/div>\n\n\n\n

By that, what I mean is this. If you sell the triangle and close, you get out above 22 and take the loss, whatever it is, 4 points. Or you use a very wide stop, like maybe above the high of the day, and not get out above 27 or something like that or above 18. So you either get out above 22 or you\u2019re looking to use a wide stop, betting on a trading range, and then selling more below a bear bar. So you sell the triangle and close, you sell more below 29 or below 30, and then either try to get out in between your two sells or at your original sell and breakeven on your first sell and with a profit on your higher sell.<\/p>\n\n\n\n

Get back to the question: \u201cWhat is the best strategy for trading in a triangle with quite a big range like today?\u201d <\/p>\n\n\n\n

\"Ask<\/a><\/figure><\/div>\n\n\n\n

In\ngeneral, if you\u2019ve got bull bars near the bottom, I tend to buy below, like\nbelow 50 or 52. If you have bear bars near the top, I tend to sell above. But\ntoday I thought we never went back to always in short, so I\u2019m less interested\nin the sells.<\/p>\n\n\n\n

But\nselling above 39, or you look for a small bear bar to sell below. I kept saying\nthe sell signals just don\u2019t look all that good. Or you look for a small bull\nbar to buy above, especially if you get a second signal. You could argue 38 is\na second signal, but you had to risk 4 points to make 1 or 2 points. 44, a\nsecond signal as well.<\/p>\n\n\n\n

But\nat that point I kept saying, \u201cEh, I don\u2019t know. We\u2019re in that 10:00 to 11:00\nwindow when the market tends to trap traders into doing the wrong thing, and\nthen it tends to run stops and reverse.\u201d So if you\u2019re buying above 44, you\nprobably need a wide stop down here, thinking that it might go below 22 and\nreverse \u2013 which is what it did.<\/p>\n\n\n\n

So\na triangle is just a trading range. In all trading ranges, I\u2019m looking to buy\nlow, sell high, scalp. I can buy low with stops or with limit orders. I can\nsell high with stops or with limit orders. If I\u2019m entering with stops, I want\ngood signal bars, and if the leg down is strong, I\u2019d rather wait for a second\nsignal bar. If a leg up is strong, I\u2019m looking to sell. I\u2019d rather wait for a\nsecond sell signal bar. So do I sell below 27 or below 29? 29 is better.<\/p>\n\n\n\n

Here,\nthis was a credible buy, but only if you could use a wide stop. And then here,\nnot a good buy, 56 or 58. But a second buy, 60, third buy, 62 or 64. Getting\npretty high up. Not ideal.<\/p>\n\n\n\n

Further to the question: \u201cWhen you\u2019re in a triangle, do you avoid stop entries completely?\u201d<\/p>\n\n\n\n

No,\nit depends. If I think it\u2019s mostly a trading range type day, a lot of trading\nrange price action, and I can see traders making money with limit orders \u2013\nbuying below things, selling above things \u2013 then I\u2019m going to buy below things\nand sell above things. I prefer stop entries or market orders or buy or sell\nthe close, because that\u2019s trending type behavior, and it requires less thought\nbecause if it\u2019s in a trend, you\u2019re not constantly wondering, is it going to\nreverse. You\u2019re pretty confident that it\u2019s not going to reverse. So mentally,\nit\u2019s easier. Plus it\u2019s more fun.<\/p>\n\n\n\n

But\non a day like today, when you see it reversing every 2 or 3 bars all day long,\nlots of overlapping bars, sideways for 3 or 4 bars at a time, very prominent\ntails, I end up taking a lot of limit order trades and a lot of backwards type\ntrades. So instead of looking to sell 21, I\u2019m looking to buy either the 21\nclose or a reversal up from 21. Instead of looking to buy 28, I\u2019m either\nlooking to sell the close to 28 or looking to sell a reversal down.<\/p>\n\n\n\n

Okay,\nstill sideways, 60-minute chart. We still have the midpoint. Here\u2019s the 5 week\ntrading range. I still think we might have to hit the middle of the range\nbefore we go up. So right now I think we\u2019re going above the top of the range,\nfailing, and then going down here. But we may not go straight up. We may have\nto go below the pink line, the midpoint of the range, and then go up and then\ngo down.<\/p>\n\n\n\n

Predicting\nthat many moves, the probability of it being right is small. But when I look at\nit, if you ask me what the market\u2019s going to do, of all the things that it\ncould do, that\u2019s what I think it\u2019s going to do. A buy signal bar, a bull bar, a\npullback on the daily chart, but a doji and a magnet below. So, not a very good\nlooking buy setup. So, I still think we probably have to get below the pink\nline, the 50%, the midpoint of the 5 week range.<\/p>\n\n\n\n

All\nright. Hope everybody has a good night.<\/p>\n\n\n\n

Al Brooks<\/em><\/p>\n\n\n\n

Information on Al’s Online day trading room<\/a><\/p>\n\n\n\n

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Closing questions BPA trading room Q&A: September 3, 2019   Question: \u201cWhen you became consistently profitable, did people give you a hard time about trading as a career?\u201dVideo duration: 15min 36sec <!– You can also view this video on Al’s YouTube Channel if needed. –> You\u2019re a young guy, if you\u2019re around in the \u201980s […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","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":"shadow","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[159],"tags":[],"class_list":{"0":"post-93738","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\/93738","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=93738"}],"version-history":[{"count":0,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts\/93738\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/media?parent=93738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/categories?post=93738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/tags?post=93738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}