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This interview features Al Brooks—yes, the price action legend—sitting down with the Desire To Trade podcast to unpack how he actually trades. Brooks is the guy behind the price-action books and courses that shaped a generation of day traders, and he still trades and teaches daily. The conversation matters because it strips away indicators and hype in favor of what price is doing right now, why that’s “truth,” and how a trader can build a repeatable process around it.
In this piece, you’ll learn Al Brooks’s core playbook: reading the market cycle (trend → channel → trading range), using the “price is truth” lens to act without needing a narrative, and applying practical rules like defaulting to two-times-risk targets when conditions aren’t in a clear breakout. You’ll see how he thinks about stops (below the most recent major higher low in an uptrend), when to favor limit orders over stops, and why most breakouts fail inside ranges—plus the mindset angle of sizing to your “I-don’t-care” level so you can trade well and stay happy.
Al Brooks Playbook & Strategy: How He Actually Trades
The Core Lens: Price Action First, Everything Else Second
This is the foundation: read what price is doing bar-by-bar and classify the day. If you can tell whether the market is trending, channeling, or chopping in a range, your entries, stops, and expectations get way clearer.
- Start every session by labeling the “always-in” direction after the first 10–20 bars: up, down, or sideways. Trade with it unless a strong reversal flips it.
- Classify the day early: trend day, broad channel, or trading range. Default to “range” until proven otherwise by strong consecutive trend bars with follow-through.
- Use a simple 20-bar EMA as a “magnet” and d fairness line. Expect pullbacks to it in trends and frequent crosses inside ranges.
Setup Selection: High-Quality, Repeatable Patterns
You don’t need ten patterns—just a few that repeat. Focus on patterns that define risk clearly and line up with the context you just labeled.
- Favor second entries (e.g., a second push to test a high/low) over first attempts, especially in trading ranges.
- In trends, look for pullbacks forming a small wedge or two-legged pullback that ends near the 20-EMA or prior micro-swing.
- In ranges, fade breakouts that stall within 5–10 bars and lack follow-through; expect return to the range middle.
- Treat measuring gaps (strong breakout, small pullback, strong continuation) as trend-continuation setups; project a measured move for targets.
Entries: When To Click, Not Just Where
Good entries come from letting the market show its hand. You’re buying strength in an uptrend and fading weakness at the edges in a range—but only when risk is well defined.
- Enter with stop orders in trends (buy 1 tick above a strong bull signal bar; sell 1 tick below a strong bear signal bar).
- Use limit orders only in clear ranges at the range edges; avoid limits into strong opposite-color trend bars.
- If the signal bar is average or small, require strong context (e.g., second entry, test of prior swing, confluence with EMA) before taking it.
- Skip inside bars unless they are second-entry triggers or occur after a strong breakout with immediate follow-through.
Stops & Targets: Pre-Plan So You Don’t Flinch
Define the “pain line” before the trade. Stops go where the setup is proven wrong; targets follow the environment you labeled.
- Default stop: beyond the signal bar and the most recent swing by a small buffer (e.g., 1–2 ticks beyond).
- Trend target: base case is 2R; trail only after partial take-profit at 1R–1.5R to pay yourself.
- Range target: fade to the opposite side, but scale out at the midline; if momentum dies early, exit at 1R and reset.
- For measured moves after a strong breakout, project the height of the prior leg and place a runner target there.
Trade Management: Let Structure Do The Heavy Lifting
Most of the edge lives after the entry. Manage according to what type of day you’re in and don’t let a range day trick you into trend expectations (or vice versa).
- In trend days, allow one deeper pullback (up to the 20-EMA or prior swing) before giving up the swing idea.
- If a breakout lacks follow-through on the next 1–2 bars, cut quickly or tighten to breakeven; failed breakouts often snap back fast.
- Move stop to breakeven only after the trade closes beyond your entry by at least 1R or tags the EMA in your favor on a pullback.
- If the market flips the always-in direction against you with two strong opposite trend bars, exit—don’t debate it.
Risk Sizing: Stay At Your “I-Do n’t-Care” Level
The size you trade determines the quality of your decisions. Keep the size small enough that a losing streak doesn’t push you into hope mode.
- Risk a fixed fraction per trade (e.g., 0.25%–0.5% of account) so 3–4 losses are just business, not panic.
- Cap daily loss at 1–2% maximum; stop trading for the day if hit—review and reset.
- If the pattern needs a wider stop (e.g., a deep pullback), cut the size so the dollar risk per trade stays constant.
- Avoid adding to losers in trends; only consider scale-ins in clearly defined ranges and pre-set a hard maximum of two entries.
Timeframes & Instruments: Keep It Simple, Keep It Liquid
You want clean structure and tight spreads. That’s how price action reads best, and execution is cheaper.
- Pick one primary liquid instrument (e.g., ES, NQ, CL, or a major FX pair) and master its rhythm before adding more.
- Use a single main timeframe for signals (e.g., 5-minute), with occasional glances at the next higher timeframe to confirm context.
- If a higher timeframe is ranging, lower timeframe breakouts are lower probability—treat them as mean-reversion until proven otherwise.
- During obvious news spikes, stand aside for 3–5 bars unless you are specifically trading breakouts with pre-defined risk.
Trend vs. Range Rules: Expectations Drive Exits
Outcomes differ by environment; so should your expectations. This keeps you from overstaying slow trades or bailing too early on strong ones.
- In uptrends: buy pullbacks that hold above the most recent higher low; exit partial at prior swing high, hold runner to 2R or measured move.
- In downtrends: sell pullbacks below the most recent lower high; same partial/runner logic.
- In ranges: sell near the top third and buy near the bottom third; reduce size, tighten profits, and expect failed breakouts.
- If the range breaks with two closes and follow-through bars, switch to trend rules immediately.
Reversals & Exhaustion: Don’t Predict; Let It Confirm
Reversals are frequent but costly if you jump early. Wait for proof that the other side actually took control.
- Require a clear signal: wedge top/bottom, double top/bottom with a strong reversal bar closing beyond the signal.
- Enter on the second attempt to reverse (a higher low for bulls, lower high for bears) rather than the very first poke.
- Place a stop beyond the extreme that defines the reversal; first target is the prior swing or EMA, then consider a measured move if momentum builds.
- If the reversal stalls within 3–5 bars, scratch or cut to a tight stop—failed reversals often rejoin the prior trend hard.
The Pre-Trade Checklist: Fast Filters Before Clicking
A simple checklist prevents “meh” trades from slipping in. Two minutes here can save you a dozen impulsive entries.
- What’s the always-in direction right now? If none, assume range.
- Is this setup a trend pullback/continuation or a range fade? If neither, skip.
- Where is my invalidation (stop) and 2R target? If 2R is unrealistic given the structure, pass.
- Am I within my daily risk budget and at my “I-don’t-care” size? If not, reduce or stop.
Daily Process: Structure Builds Consistency
Your routine is the edge that wraps all the rules together. Keep it tight and repeatable so your execution stays steady.
- Pre-open: mark overnight high/low, prior day’s high/low, and obvious range or channel; decide default bias and what flips it.
- During session: label context every 5–10 bars; take only A-setups that fit today’s environment.
- Post-close: screenshot two best setups (win or loss), note what made them A-quality or not, and record R-multiple, stop, and target logic for next time.
Size Risk So Losing Streaks Barely Dent Your Mindset
Al Brooks hammers home that your position size is the governor on your psychology. If a single loss or a small cluster of losses rattles you, you’re trading too big. He frames risk so that a normal losing streak is financially and emotionally tolerable, which keeps execution clean. That calm is the real edge, because it lets you follow your plan when the market gets noisy.
Brooks keeps dollar risk per trade fixed and lets volatility dictate how many contracts he trades. He’d rather cut size than widen emotions, ensuring each loss is just a business cost, not a crisis. Daily loss limits act like circuit breakers, so one rough patch can’t snowball into a tilt. When risk sizing is right, you think in R-multiples, stick to stops, and trade the next setup without flinching.
Read Market Structure First: Trend, Channel, Or Trading Range
Al Brooks starts by labeling the day’s structure before thinking about entries. He wants to know if buyers or sellers are “always in,” or if neither side has control. If the chart shows strong consecutive trend bars with follow-through, he treats it as a trend day; if swings keep overlapping the 20-EMA, he assumes range. This simple classification sets expectations for entries, stops, and profit targets.
When Al Brooks sees a channel, he plans for pullbacks that respect the channel line rather than chasing late. In a true range, he expects failed breakouts and aims to fade the edges back toward the middle. If the structure is unclear, he defaults to range logic until the market proves otherwise. That sequence—trend, channel, or range—keeps decisions consistent and stops you from forcing trades that don’t fit the day.
Read Market Structure First: Trend, Channel, Or Trading Range
Al Brooks starts by labeling the day’s structure before thinking about entries. He wants to know if buyers or sellers are “always in,” or if neither side has control. If the chart shows strong consecutive trend bars with follow-through, he treats it as a trend day; if swings keep overlapping the 20-EMA, he assumes range. This simple classification sets expectations for entries, stops, and profit targets.
When Al Brooks sees a channel, he plans for pullbacks that respect the channel line rather than chasing late. In a true range, he expects failed breakouts and aims to fade the edges back toward the middle. If the structure is unclear, he defaults to range logic until the market proves otherwise. That sequence—trend, channel, or range—keeps decisions consistent and stops you from forcing trades that don’t fit the day.
Adjust Position Size To Volatility; Keep Dollar Risk Constant
Al Brooks emphasizes that volatility sets your contract count, not your mood. If the market’s swinging wider, he widens the stop to where the setup is actually invalidated and cuts size so the dollar risk stays the same. That way, a choppy morning or a news burst doesn’t blow through your limits just because the bars grew taller. He treats ATR or recent swing distance as the practical yardstick, then backs into position size with a simple risk-per-trade number.
When conditions calm down, Al Brooks allows size to scale back up—only because the stop distance shrinks, not because he “feels good.” This keeps R-multiples comparable across different sessions and instruments, which makes performance analysis cleaner and more honest. It also stabilizes your psychology, since wins and losses have with similar dollar impact regardless of the day’s tempo. By letting volatility drive size and keeping dollar risk fixed, you preserve consistency while the market does what it wants.
Define Stop And 2R Target Before Clicking Buy Or Sell
Al Brooks insists that every trade begins with a location for being wrong. He sets the stop just beyond the price that would invalidate the setup—below the signal bar and prior swing for longs, above for shorts—with a small buffer. By fixing the stop first, he can instantly calculate position size and remove any temptation to “give it a little more room” after entry. This turns the trade into a planned bet, not a negotiation with the market.
With the stop defined, Al Brooks maps a realistic 2R target based on structure—prior swing, measured move, or the day’s magnet, like the EMA or range midline. If 2R isn’t plausible in the current context, he skips the trade rather than forcing it. Partial profits can come off around 1R on slower days, but the core idea is to pre-commit so emotions don’t rewrite the plan mid-stream. Stops and 2R targets set before the click make execution faster, sizing cleaner, and outcomes easier to review.
Fade Range Edges, Ride Trends, Switch When Proof Arrives
Al Brooks treats ranges as mean-reversion machines until the market proves otherwise. Near the top third of a range, he looks for exhaustion or a second-entry short; near the bottom third, he looks for a higher low or second-entry long. Targets are modest: midline first, opposite edge if momentum holds. If a breakout fires but the next bar fails to follow through, he assumes it’s a trap and reverts to fading. The goal is simple—trade what’s typical for ranges and keep expectations tight.
When the market finally shows proof—a strong breakout bar with immediate follow-through and closes beyond the range—Al Brooks flips to trend logic without hesitation. He stops fading, waits for a pullback to the breakout area or EMA, and then rides with the new “always-in” direction. Exits scale from partial at 1R to runner toward a measured move, but only while trend behavior stays intact. If trend evidence disappears, he downgrades back to range expectations. Flexibility, but only with proof, is how he stays aligned with the tape.
Al Brooks’ core message lands the same no matter where you trade: keep size at a level where a normal losing streak is a shrug, classify the day before you hunt entries, and let stops and targets be decided by structure—not hope. In the interview, he frames every session through a simple cycle—trend, channel, trading range—and then trades what’s typical for that environment. That lens clarifies everything else: in ranges you fade edges and pay yourself at the midline; in trends you buy (or sell) pullbacks and let measured moves do the heavy lifting. When a range finally breaks with real follow-through, you flip to trend rules and stop fighting the tape.
Brooks also drills into mechanics you can apply immediately. He sets the stop just beyond the price that would prove him wrong, calculates position size off that distance, and skips any setup that can’t reasonably deliver 2R in the current context. Volatility simply changes the contract count, not the dollar risk. He uses practical magnets—prior swings, the 20-EMA, and measured moves after strong breakouts—to place targets where the market actually tends to go. And he keeps the mindset boring in the best way: a daily loss cap, partials on slower days, scratch fast when breakouts fail, and screenshot the best (and worst) trades after the close. Put together, Al Brooks’ “price is truth” playbook is just disciplined execution of a few repeatable ideas—structure first, risk sized to reality, stops/targets pre-planned, and flexibility only when the market proves the regime has changed.
