Video 04 My Setup

Chapter 1: Introduction

• Presenter: Al Brooks

• Focus: Daily trading setup

• Tools Used:

  • Two laptops:

    • One laptop for trading

    • Other for chat room

• Chart Types:

  • 15 minute charts

  • 60 minute charts

  • Daily charts

• Office Environment:

  • Shutters closed to minimize distractions

  • No incoming calls except from children

  • Avoids watching television and ignores news and pundits

• Trading Mindset:

  • Goal is to profit from other traders' losses

  • Emphasizes focus and minimizing distractions

Chapter 2: The Moving Average

• Primary Chart:

  • 5 minute chart used predominantly

  • Blue line denotes the 20 bar exponential moving average (EMA)

  • Dotted blue line represents the 60 minute, 20 bar EMA plotted on the 5 minute chart

• Tool Development:

  • Created a TradeStation indicator for plotting the 60 minute moving average on the 5 minute chart

• Understanding Chart Differences:

  • Potential differences in chart results can be due to using a:

    • 24 hour (Globex) chart vs. day session chart

    • Quarterly charts vs. continuation charts

Chapter 3: A Daily Chart

• Chart Analysis:

  • Image of trading setup with multiple charts (5 minute, 15 minute, 60 minute, daily)

• Moving Averages Focus:

  • Attention given to trend lines, measured moves, prior highs and lows

  • Important moving averages observed:

    • 5 minute EMA

    • 15 minute EMA

    • 60 minute EMA

• Indicator Details:

  • Formula cannot be simply copied; needs to be typed out character by character in TradeStation

Chapter 4: Moving Average Set

• Comparison and Approximations:

  • Alternative indicator used to plot the 15 minute EMA on the 5 minute chart

• Approximation Techniques:

  • For 60 minute EMA using 5 minute chart:

    • Set the EMA to 240 bars (12 bars per hour x 20)

    • Better accuracy with a number smaller than 240, e.g., 220

  • For 15 minute EMA:

    • Recommended approximation is around 50 bars instead of 60 due to overlapping bars on the 5 minute chart

• Daily Chart Considerations:

  • Common moving averages used:

    • 200 day simple moving average (SMA)

    • 150 day SMA

    • 100 day SMA

    • 50 bar SMA

Chapter 5: Conclusion

• Market Behavior Analysis:

  • Observing interactions with moving averages:

    • Price movements around the 100 bar moving average shown

    • Additional reactions to the 150 bar moving average highlighted

• Forex Considerations:

  • Less emphasis on moving averages in forex charts compared to stock charts

• Closing Note:

  • Thanks for watching the Brooks trading course

  • Summary of personal trading setup and insights shared.