Al Brooks' Key Lessons | Important Lessons from Al Brooks

Al Brooks has popularized himself as a price action trading promoter and a master of the bar charts. Beyond his chartist teachings, what else can traders learn? Throughout the following sections, this article discloses 7 key lessons that ground his methodology and comprehension of the market, as price action is nothing more than a human phenomenon.

Price Action As The Key To Successful Trading

For Al Brooks, there is no holy grail or hidden secret to succeed when trading financial assets. The price action as a methodology to analyze the market and assemble a strategy is what Al Brooks stands for as the only conceivable procedure to gain an edge in front of the inherent uncertainty of all possible and unpredictable directions of price movements.

Traders may discover that edge by developing a high probability trading strategy, which requires studying the market from a deeper standpoint to answer questions such as how the rest of the participants may act at a specific price level, why markets follow patterns, and which ones are the most significant.

Indicators, Candle Patterns, And Context, According to Al Brooks

Indicators do not have as much weight in the analysis process of market structures as they have to identify support and resistance correctly, especially those zones dominated by supply and demand factors, commonly referred to as "key levels."

Market patterns are advantageous, but they are not reliable without context. Al Brooks thinks that since price movements are not perfect, candle patterns are neither, which is why they rarely appear the way they are supposed to, according to theory.

In that sense, traders can spot refined forms of pattern manifestation by leveraging the context in which they appear, for instance, around support and resistance key levels. This notion led him to compose a custom terminology that pinpoints price action as follows:

• Wedge Selloff
• Wedge Bull/Bear Flags
• Double Top Bear Flag
• Double Bottom Bull Flag

That terminology strives to unveil typical patterns that are not clearer when they appear in the middle of trends, which means within what Al Brooks would call "measured movements" (MM) or even ranges and breakouts of them.

What Is Price Action? Al Brooks' Definition And Why All Movements Are Important

Al Brooks concedes that there is no definitive and accepted definition for the price action concept among all traders and the trading field. He sticks to a broader notion.

His idea fetches all the scenarios possible for analysis, including different time frames, markets, and chart types, and he establishes an indistinguishable relationship between all bars since they form similar structures.

Beneath such conception, he concludes two vertebral ideas backing his methodology:

1. He states that any chart type is suitable for trading, from 1-minute to daily charts, where the price action in those time frames reflects the same in a volume chart. Likewise, that structure is expressed similarly in charts based on ticks and, consequently, in a range chart type.
2. He believes every tick matters as well. Each price fluctuation is a price action that can potentially lead to significant circumstances in the market.

Al Brooks recognizes the role of computers acting at specific price levels. However, the two ideas conveyed previously implicitly point out something more meaningful: the price action as a representation of rational decisions

The Market Structure As a Reflection of Human Behavior

Al Brooks emphasizes the rational characteristics of humans as principal shapers of market structures. The factors influencing price movements are all the same since they belong to the behavior involved in the decision-making process when traders buy or sell.

Al Brooks specifically remarks on those behaviors as logical and survival skills rooted in genes throughout thousands of years of evolution. Also, in the case of automated trading, he establishes a distinction just in the speed at which computers perform. However, since they are algorithms programmed by humans, the price action they pursue they pursue will be similar.

Failure Attempts: Understanding Market Phases and Inertia

The notion of price action as a direct consequence of human decisions reflects not just the causes behind the market structure but also offers hints on why the markets experience trending or range phases and continue so over a determined period.

As noted before, as the price moves, it tends to patterns, channels, support, and resistance, while traders expect relevant levels to take action.

Such moves lead to what Al Brooks calls "market inertia," which is the tendency of the price to continue an established path: "My 80% rule is that 80% of trend reversal attempts will fail. Also, 80% of trend breakout attempts in Trading Ranges will fail".

And why does that happen? According to Brooks' lessons:

• Trending markets regularly test traders through reversal attempts that naturally fail since other traders bet in the trend's favor.
• Range markets remain so since experienced traders scalp, buy lows, and sell highs while expecting a significant breakout.

Acknowledge The Trading Difficulty

For Al Brooks, acknowledging trading is a complex activity represents a step forward in the traders' trajectory to successful trading. This mindset admits the possibility of making money and the necessary process to achieve that goal.

Consistency is the real challenge. Traders do not have to trade perfectly but develop a system that clusters various strategies, making it adaptable over time while keeping its rule base invariant.

This way, traders can find an edge in the zero-sum trading game from the short-term to the long-term. Jumping from one system, indicator, pattern, or strategy to another is an easy path to undermine all chances of success by simply accepting the hard truth that trading is difficult.

Why All Traders Should Swing Trade

Although Brooks' teachings seem primarily focused on a scalping approach, he does not neglect the swing method. Indeed, he believes that the process and patience involved in holding a position longer may not produce more pleasing profits only but enhance the traders' strength and experience as swing moves implicate more price action like pullbacks, which typically scalpers avoid dealing with.

Conclusion

Beyond scalping or swing trading, indicators or candle patterns, and technical or chartist analysis, the price action method offered by Al Brooks presents an in-depth intent of navigating the multiple setups traders might discover by analyzing the market structures as a human consequence and accepting the trading difficulty while avoiding easy mindsets like relying on indicators as holy grails or seeking candle patterns on missing contexts.

Al Brooks lessons are seizable in a crypto trading platform like Altrady, where beginners and professionals can leverage a wide range of chartist tools to start spotting price action setups just by signing up for a free trial account today.