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Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader by Al Brooks

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CHAPTER 25

Trading Guidelines

Why guidelines and not rules? Because “rules” imply absolutes and easy trading if only you follow them. However, trading is subjective, your edge is always going to be small, and it is very difficult to get to the point where you are consistently successful. If there were clear, objective rules and they consistently resulted in profitable trades, everyone would soon discover them. There would quickly be no one left to take the opposite side of the trade, and the rules would then stop working.

Here are 78 suggested guidelines.

1. Reading these 570,000 words is like reading a detailed manual on how to do anything, such as playing golf or a violin. It takes a lot of hard work to turn the information into the ability to make a living as a trader, but it is impossible without understanding how markets work. Like being a professional golfer or violinist, no matter how good you get, you always want to be better, so the challenge and satisfaction last long after you become consistently profitable.

2. Everything that you see is in a gray fog. Nothing is perfectly clear. Close is close enough. If something looks like a reliable pattern, it will likely trade like a reliable pattern.

3. There is no easy set of reliable rules to make money as a trader, and everything is subjective. This is a zero-sum game with very smart players, so when an edge exists, it is small and fleeting. For a trader to make money, he has to be consistently better than half of the other ...

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