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Hello everyone,
I hope you're all doing well. I've been working on incorporating Al Brooks' method of labeling H1, H2, L1, and L2 setups directly on my charts, but I’m having a bit of trouble getting the logic to work consistently. I was wondering if anyone here has successfully created or come across a script for either TradeStation or ThinkorSwim that can accurately label these setups?
I have a code for TOS but it's not working right. (attached)
If anyone has a working code or could share insights on how to best implement this, I’d really appreciate it!
Thank you so much for your help, and I look forward to your suggestions.
Let me explain the concept of Hs or Ls. This seems to be an area that causes a lot of problems for people studying Price Action. The idea comes from the rule Al has stated many times: the market often tries to do something twice. If the market is in a bull trend there will be attempts by the bears to reverse that trend. They will push the market down but fail to take control and the market will then bounce a little. After the bounce the bears will try again to push the market down and this forms the two-leg pullback often called an ABC correction. Since the bull trend has been strong, the bears will lose control as bulls use the lower price to buy aggressively. The bar that forms the bottom of the correction will usually be the setup bar for a H2 which is triggered when the market trades above the H of that bar and indicates the bulls have likely regained control of the market and the trend will resume. The whole point of Price Action is to identify points where the market is likely to go in one direction rather than the other and a H2 is one of them since, as Al has said, most attempts to reverse bull trends fail and become bull flags. Sometimes instead of a H2 you will see a H4 but the concept is the same since it means each leg of the two-leg pullback has its own two-leg pullback. Everything here works in reverse with Ls. The reason that finding these setups is not pure science is that the back and forth of a pullback can be hidden in the bars of the time frame you are using and why it is often helpful to look at a lower time frame chart if you unsure about what is going on. Don't use the lower time frame to chart but simply to see what the market is doing in terms of Price Action. I hope this is helpful
I would advise not relying on an indicator to label them. There is quite a bit art rather than pure science to finding these setups and I think you are better off in the long run if you hone your skill rather than rely on a computer program that will not be able to duplicate human judgement.
Nice reply Andrew.
I would like to add to this point that H123L123 resets are also very subjective, when is the BO big enough to restart the count? I've also thought long and hard about making Al's concepts into indicators, if only to serve as a reminder to think about a certain concept. But I've find out that if an indicator is not 100% precise in signalling what it's supposed to do, it only costs me more mental energy to double check its accuracy.
