Al Brooks is a qualified ophthalmologist and professional trader. He is the author of many financial books including the Brooks Trading Course, several books on trading activity and his new three-book series, Trading Price Action. He also provides live intraday E-mini price action analysis and free end-of-day analysis and has had numerous articles published in Futures Magazine.
I caught up with Mr. Brooks in his home in California on a quiet Sunday morning when markets were closed.
(DailyForex) How did you make the leap from doing eye surgery to being a full time trader?
I grew up poor and my mother wanted me to become a doctor because all doctors were rich. I attended the University of Chicago, went through medical school and residency and spent a good number of years as an ophthalmologist.
As a child, I was always interested in financial markets and I taught myself at an early age about investing. I did a lot of reading and attended many seminars.
I was doing quite a bit of trading while working as a full-time surgeon. Then several things happened that led me to change my life's directions: 3 weeks before the stock market crashed in 1987, I shorted the S&P 500 on 13 contracts. After the crash, I bought them all back.
In 1988, my wife gave birth to twin girls and my help at home was more in demand. In 1990 I left my position as a doctor and took on trading as a full-time career.
(DailyForex) How successful were you at first?
For the first 10 years of trading, I lost all my money. But I learned a lot over that period and ascertained many things about trading.
(DailyForex) What did you learn?
The first thing I realized was that unlike medicine where one could focus on absorbing knowledge from more experienced people, trading did not work that way. Basing your trading on other traders' advice does not lead to success. Too many traders are out there teaching about indicators, graphs and other tools. They are blasting these concepts on their websites, at seminars and are using them to market their own product.
This is not the way to trade. Each person has to find the way by himself. You can't learn to trade the same way you buy a TV set. You have to experiment, be prepared to accept partial profits and learn when to re-enter the market. Some traders are scalpers and want to make quick profits with low payouts. Others are willing to wait it out for longer time frames and greater profits.
(DailyForex) What else did you learn?
It takes a long time to get good at trading. A person has to be willing to stay with it. Even those people who go through business school or start at the bottom at Goldman Sachs have to work their way up before becoming a successful trader. Each person must explore his own way until he feels comfortable in the way he is trading.
Trading is all about finding the support and resistance levels. Most success stories follow along these lines. Watch the averages, follow the measured moves, and use trend lines as a guide. Watching the support/resistance level is the only way to manage your trades. Markets behave all day long under buying and selling pressure and monitoring the s/r level is key to successful trading. The most important thing is to understand how to read price action.
Another thing that brokers seem to focus on is the risk-reward ratio. I believe that this is misleading to the trader and that he should be focusing more on probability. This is a very important concept. Probability in trading is not the expected 50-50 divide. That is a casino's edge type of thinking.
Traders should understand that there are always two sides to the equation and that probability can never be more than 60% or less than 40%. All trades have an uncertain outcome. There is no perfect trade and you have to respect the other side which is usually a professional institution.
(DailyForex) You refer to yourself as a "?trading hermit." What exactly do you mean by that? How does Al Brooks trading fit into all this?
I'm 62 years old and I love to trade. I don't spend my time playing golf or fishing. I don't read the financial news or watch it on television. I sit in my office and don't allow any outside influences to come in and I don't engage in much live communication. I concentrate on what is happening to each stock I am considering and try to have a clear and steady stream of thought.
Over the last few years, I have started giving webinars and interviews but I still rarely go outside.
(DailyForex) Your new series of books, Trading Price Action, is filled with advice and tips for traders. What motivated you to write it?
I wrote these books to make it easier for interested traders to learn how to successfully trade. The books provide detailed analysis of how markets work and how to trade them. I worked my way up from the bottom when I started trading and I enjoy sharing my experience in hopes that others might find it helpful.
(DailyForex) What are some of your ambitions in the field of trading going forward?
I am currently giving a daily market report and webinar which I will continue to do until I decide to stop. I write articles from time to time and may write some more books.
My Brooks Trading Course with its 53 videos remains popular and there are over 500,000 participants viewing the course.
(DailyForex) Mr. Brooks, I want to thank you for taking the time to speak to me about Al Brooks Trading and Al Brooks Price Action.
It was my pleasure.