Al grew up on the East Coast. He didn’t know he was poor until he was 4 years old. He saw people with fancy cars and boats. He never got what he asked for for Christmas. He could never buy the toys he saw shopping. He decided he didn’t like being poor. So his goal from a very young age was to be rich.
He decided the best way to get rich was to become a businessman. But in his upbringing, you do what your parents tell you to do—and his mom told him to become an eye surgeon. From that point on, he thought that’s what he had to become. So he became a good student and went to a great medical school and became an eye surgeon.
The entire time he was at the University of Chicago studying ophthalmology, he dreamed of working at the Chicago Mercantile exchange--a place ideal for developing commodity trading strategies. He felt so strongly that that’s what he needed to be doing with his life. But he found himself as an eye surgeon. What happened next? Al’s journey wasn’t easy. He shares some of the struggles he had to overcome and how he’s found success as a swing-trader AND a scalper. Don’t miss it!In this episode of How To Trade It, @AlBrooksTrading shares how he went from being an eye surgeon to a full-time trader. Don’t miss his fascinating story! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #SwingTrading… Click To Tweet
Subscribe to How To Trade It
You’ll want to hear this episode if you are interested in...
- [0:58] Al’s background and transition into trading
- [3:53] Al’s focus: make money and be happy
- [9:11] When Al saw the potential in trading
- [11:55] What trading looked like in the 80s
- [14:42] Why you NEED multiple trading accounts
- [21:35] Why does Al love trading?
- [26:22] Probability and risk versus reward
- [30:21] The parallel between fly-fishing and trading
- [33:51] How to snag some of Al’s resources
What trading looked like in the 80s
Al shares that in the 80s, you had to call a phone number to make a trade. The broker would answer the phone and you’d say what you wanted to sell. He’d write it on a piece of paper and hand it to a runner who would then take it to the guy in the pit. The guy in the pit would find someone to buy it. The paper would be taken back to the broker and he’d let you know the price you were filled at.
Anyone on the floor had the advantage. Anyone at home had to wait an average of 2–3 minutes to fill a trade. It was virtually impossible to implement any sort of scalping trading strategy. In some of the trades Al took the day we recorded, he was in and out in a matter of 15 seconds. That wasn’t possible back in the 80s.
Back then, you were basically swing-trading. Now, you can take small trades that will last minutes. There are 81 bars on the 5-minute chart for the E-mini. Al sees an average of 40 trades a day—which would be impossible to do over the phone.
Why you should have multiple trading accounts
Al has a lot of accounts with different brokers that he trades them all regularly. Why? A few months ago, TD Ameritrade trading got locked up. You couldn’t get in or out of a position if you wanted to. If you have multiple accounts on different platforms, you could offset the position in one of your accounts.
If you wanted to trade a retirement account or IRA in the 80s, you couldn't just open an account with a broker. You had to have a trustee hold your money. So you had to open a trustee account so the broker wouldn’t run off with your money. So Al put his money into a trustee to trade in his IRA. One day, he got a letter saying that the trustee ran off with $75 million—including all of his money. It’s one more reason why he holds multiple accounts.Why should you have multiple trading accounts? @AlBrooksTrading shares his thoughts in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #SwingTrading #SwingTrader Click To Tweet
Why does Al love trading?
Al admits that he has always been competitive. He loves playing and watching sports. It’s fun to compete. Trading is an intellectual competition that is very satisfying. He loves thinking all day long. He loves watching things unfold and trying to anticipate what will happen. Then the goal is to structure a trade that allows him to profit.
He believes everything that happens happens for a reason. It’s not just noise. Noise is whatever you don’t want to pay attention to. If he trades a 5-minute chart and something is happening on a 2-second chart and he isn’t paying attention, that’s noise.
In the 80s and 90s, many things happened that he didn’t understand. He just thought hedge funds were trying to take his money, which isn’t the case. They’re 95% of the market. They can’t survive taking money from the 5%. The market doesn’t care about you or know that you exist. If it does take your money it’s because you did something stupid.
Probability and risk versus reward
Al holds percentages in his mind for every pattern. He has an encyclopedia documenting over 400 patterns. For every pattern, he has a failed pattern. He knows the percentages going into the trade and makes sure the risk and reward work with his probabilities. Risk versus reward doesn’t matter as much as probability.
The safest way to look at trades? Everything can fail. 90% of the time you’re 40–60% certain about anything. A good scalper wants to win 90% of the time so they’re looking for high probability trades. But if you get probability, the other person gets risk/reward. It comes with less profit potential. A lower probability may get you a greater reward. Look for trades where the reward is 2-3x the risk, then you only have to be right 40% of the time. If you think like a swing trader, you will become consistently profitable.
The parallel between fly-fishing and trading
Al is an avid fly-fisher. When he fishes, he tries to figure out where the big fish will be. Sometimes he’ll lie on the bank and track a large fish for 2–3 hours. For 2-3 hours he catches nothing while his buddy will catch a bunch of 10-inch trout. But Al would rather catch the occasional 24-inch trout instead of 20 little ones.
If he scouts a stream and knows there aren’t any large trout, then he’ll go for as many of the little ones as he can. It’s the same for trading. He looks for the large trades and a lot of the time they aren’t there. But he sees the little trades and will go after them. You get enough little wins and at the end of the day, you’ll have a large win. When the market doesn’t offer good swing trades, Al will take as many scalps as he can.
Al shares many fascinating stories of the history of trading and the wisdom that he’s gained throughout his 35+ years of trading. Don’t miss this episode!@AlBrooksTrading shares a story about fly-fishing that demonstrates his trading strategy. Don’t miss learning about his unique take on the market! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #SwingTrading #SwingTrader Click To Tweet
Resources & People Mentioned
Connect with Al Brooks, MD
- Brooks Trading Course
- Brooks Price Action
- Live Trading Chat Room
- Follow on Facebook
- Connect on LinkedIn
- Follow on Twitter
- Watch on YouTube
Connect With Casey Stubbs
- Website: https://caseystubbs.com
- Subscribe! https://www.youtube.com/caseystubbs
- Twitter: https://www.twitter.com/caseystubbs
- Facebook: https://www.facebook.com/caseystubbs
- LinkedIn: https://linkedin.com/in/caseystubbs
- Newsletter: https://financeandmarkets.com/
Subscribe to How To Trade It