Price Action: Concept Notes (4)

I have been studying Price Action with Al Brooks for 2 years. Today is my 231st article. You should also learn Price Action.

Using correct professional terminology is critical in any field. Your vocabulary, your language expression, forms the foundational framework of your thinking. Therefore, correctly using professional terminology and communication methods ultimately makes your logical thinking clearer and more precise.

When two legs down are confirmed, a doji appears with declining momentum—take profit on your position immediately. Where there is an impulse leg up, there will be a pullback leg. After two impulse legs up, there usually follows a two-leg pullback in the opposite direction. After building a larger pattern, another two impulse legs up begin, which will inevitably be followed by a countertrend pullback. Assuming you have established a long position at any point, when the market has already completed the first leg and second leg and is approaching the high of the previous impulse, when the two impulse legs approach symmetrical magnitude, close your position immediately and lock in profits.

When small impulse legs of 3-4 bars form intraday, the probability of continued decline is actually very low—this will have a huge impact on your final returns. Enter at the best positions and take profit when profits approach their peak. Therefore, in intraday trading, being proactive is the real skill—much better than being reactive. After all, beginners all start by being reactive. Technical analysis commonly says to wait for a reversal bar to appear before closing, wait for bullish force to trigger that bar, and the system will automatically close the position when triggered. But sometimes the bar looks like this: by the time you see it, the profit is already gone. You could have exited with maximum profit by simply counting bars and impulse legs, then analyzing the magnitude of each leg.

Grasping the larger structure often helps you better position your trading strategy. After all, the larger cycle structure is what determines success or failure. This trading approach has a higher win rate and can dominate market movement over a longer time, covering more bar cycles. So grasping the big picture has more trading value than obsessing over local details. This is exactly the opposite of what beginners or inexperienced traders do—they overly focus on local details, often losing sight of the forest for the trees, missing the truly critical bigger picture.