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Question 1

What is the general definition of a swing trade according to Al Brooks?

Answer 1

A trade where the potential reward is at least twice as large as the risk.

Question 2

According to the course, what type of trader makes up the vast majority of profitable traders?

Answer 2

Swing traders.

Question 3

What personality trait is required to be a successful scalper?

Answer 3

A very special and unusual personality, as most traders should not be scalping.

Question 4

What is the primary focus of a swing trader?

Answer 4

Swing traders focus on achieving a large reward, which implies a good risk/reward ratio.

Question 5

What is the primary focus of a scalper?

Answer 5

Scalpers focus on achieving a very high probability of making a small profit.

Question 6

A scalper achieves high probability by accepting what kind of risk/reward ratio?

Answer 6

A worse (bad) risk/reward ratio.

Question 7

A scalper desires a quick profit and does not want to experience significant _____.

Answer 7

pullbacks

Question 8

What is the typical probability of success a scalper needs for a trade to be viable?

Answer 8

Between 60% and 90%.

Question 9

What is the general risk/reward ratio for a typical scalp?

Answer 9

Approximately one, where the reward is about the same size as the risk.

Question 10

Until when does a swing trader typically hold onto their trade?

Answer 10

Until the initial premise for the trade is no longer valid.

Question 11

A _____ reversal means the trend is likely to continue or evolve into a trading range, not become an opposite trend.

Answer 11

minor

Question 12

Why would a scalper trade a minor reversal against a trend?

Answer 12

They believe the reversal will be large enough for a minimum scalp profit with high probability.

Question 13

After a parabolic buy climax, what do traders typically expect?

Answer 13

A pullback with a couple of legs down.

Question 14

How do swing traders typically react to minor reversals within a trend?

Answer 14

They often hold on to their position, relying on their stop, because the trend has not changed.

Question 15

What is the expected market action following a major reversal?

Answer 15

Traders expect either an opposite trend or a trading range to develop.

Question 16

What is the biggest bull bar occurring more than 20 bars into a bull trend likely a sign of?

Answer 16

An exhaustive or climactic end to the trend.

Question 17

A horizontal trading range that forms late in a bull trend often becomes the _____.

Answer 17

final bull flag

Question 18

What is an important way to distinguish a swing trade from a scalp, besides the profit size?

Answer 18

How the trader plans to manage the trade from the moment it is placed.

Question 19

A trade managed with the intention to hold through minor reversals for many bars is considered a _____ trade, regardless of the final profit.

Answer 19

swing

Question 20

In a very strong breakout, what is the probability that the market will rally for a measured move?

Answer 20

There is a 60% chance.

Question 21

How is the ‘actual risk’ of a trade defined in hindsight?

Answer 21

The distance from the entry price to just below the low of the deepest pullback after entry.

Question 22

For a lower probability trade, what must a trader do to ensure a positive Trader’s Equation?

Answer 22

Go for a reward that is at least twice as big as the risk (good risk/reward ratio).

Question 23

What is Al Brooks’ minimum reward target for a swing trade in the E-mini futures?

Answer 23

At least four points.

Question 24

What is Al Brooks’ minimum reward target for a swing trade in Forex markets?

Answer 24

At least 40 pips.

Question 25

What is the minimum goal for a swing trader in terms of bars and legs?

Answer 25

Two legs and 10 bars.

Question 26

How many bars do most swing traders expect their trades to last?

Answer 26

At least 20 bars, which is about 2 hours on a 5-minute chart.

Question 27

A scalp is a trade where the reward is less than _____ times the risk.

Answer 27

two

Question 28

Within how many bars do most scalpers take their profits?

Answer 28

Within one to five bars.

Question 29

For scalpers, what is the advantage of using a wider, swing-style stop?

Answer 29

It allows them to scale into a trade, which increases the probability of success.

Question 30

What is the primary reason most traders should not scalp for a living?

Answer 30

It is too emotionally difficult and stressful for most personalities.

Question 31

When the market is clearly 'always in long', where should a swing trader's stop be placed?

Answer 31

Below the bottom of the most recent strong leg up (the most recent major higher low).

Question 32

What is the term for moving a stop up to lock in profits or reduce risk as a trend progresses?

Answer 32

Trailing your stop.

Question 33

What is the probability of any given entry turning into a successful swing trade?

Answer 33

It is only about a 40% probability.

Question 34

While many entries have a 60% probability of being a successful scalp, they only have a _____% probability of being a successful swing.

Answer 34

40

Question 35

In Forex trading on 60-minute charts or smaller, what profit range is typically considered a scalp?

Answer 35

Between 10 and 50 pips.

Question 36

What type of market environment is ideal for swing traders?

Answer 36

Big trends, particularly small pullback trends where the market grinds in one direction.

Question 37

Why are small pullback trends, which look like a leg in a trading range, ideal for swing traders?

Answer 37

They offer huge rewards and a great risk/reward ratio, despite having low probability.

Question 38

Why are small pullback trends a difficult environment for scalpers?

Answer 38

There are very few high-probability setups, as the pullbacks are too small to trade against the trend.

Question 39

What type of trend is ideal for scalpers, allowing them to make many trades?

Answer 39

A strong breakout trend (a buy-the-close or sell-the-close trend).

Question 40

What market environment, characterized by frequent reversals and sideways movement, is great for scalpers but bad for swing traders?

Answer 40

A trading range.

Question 41

On a 60-minute chart, a scalp is generally considered a trade for less than how many pips?

Answer 41

Less than 50 pips.

Question 42

After a strong leg in one direction, what is a key trade management rule regarding the entry price?

Answer 42

Traders do not want the market to come back to their entry price a second time.

Question 43

What is the significance if a market returns to a trader's entry price a second time after a trend has resumed?

Answer 43

It suggests the market is likely in a trading range, not a trend, and scalping is more appropriate than swing trading.

Question 44

Consecutive cell climaxes, especially near the bottom of a higher timeframe trading range, often result in what market behavior?

Answer 44

A trading range or a reversal.

Question 45

What is the general probability of a swing trade being successful?

Answer 45

At least 40%.

Question 46

Why should beginners never look for scalps?

Answer 46

It's very difficult to trade them profitably due to the required high winning percentage.

Question 47

What common mistake do beginners make when looking at a strong trend?

Answer 47

They are always looking for tops and bottoms, trying to sell reversals in a bull trend or buy them in a bear trend.

Question 48

What is the success rate of reversal attempts in a strong trend?

Answer 48

About 80% of reversal attempts fail.

Question 49

In a strong trend with small pullbacks creating 'gaps' between highs and subsequent lows, what is the only direction a trader should look to trade?

Answer 49

In the direction of the trend (e.g., only look to buy in a small pullback bull trend).

Question 50

What defines a 'stairs pattern' in a trend?

Answer 50

A pattern where pullbacks go beyond the prior breakout point, overlapping with the previous leg.

Question 51

Why is it generally a bad idea to use very tight stops when scalping?

Answer 51

A tighter stop means a lower probability of success, which works against the scalper's need for high probability.

Question 52

Instead of a tight stop, what is a better approach for a scalper to manage risk and increase probability?

Answer 52

Use a wider (swing) stop, trade a smaller position size, and be willing to scale in.

Question 53

What is the realistic minimum scalp size Al Brooks recommends for Forex markets?

Answer 53

10 to 20 pips; he will not take a trade if he only thinks it will make 5-6 pips.

Question 54

As a general guideline, a minimum scalp target should be at least what percentage of the average daily range?

Answer 54

At least 5% to 10%.

Question 55

Why is it unrealistic to try to make a living by only going for minimum-sized scalps?

Answer 55

Costs like commissions, spreads, slippage, and mistakes make it impossible to profit without an unrealistically high (e.g., 90%) win rate.

Question 56

A trader who wins 90% of the time is almost certainly a _____.

Answer 56

scalper

Question 57

What is a 'give up' bar?

Answer 57

A strong trend bar caused by trapped traders giving up and exiting their losing positions, accelerating the move.

Question 58

What is a losing strategy that beginners often employ when a scalp goes against them?

Answer 58

They convert the scalp into a swing trade, hoping it will come back.

Question 59

The biggest bear bar occurring late in a bear trend (after 20+ bars) is more likely an _____ end of the trend rather than a measuring gap.

Answer 59

exhaustive

Question 60

When a swing trader's initial premise becomes invalid due to new price action, what should they do?

Answer 60

Exit the trade, potentially converting the swing into a scalp for a smaller profit or loss.

Question 61

What is a 'second leg trap'?

Answer 61

A very large trend bar late in a leg that traps traders into thinking a new leg is starting, when it's more likely a climactic end.

Question 62

After a strong bull breakout that follows a failed bear breakout, what is the most likely outcome for the bears?

Answer 62

The best the bears can hope for is a trading range for 5-10 bars.

Question 63

When scaling into a position, a trader wants to add on at a price that is at least a _____ size away from the first entry.

Answer 63

scalp

Question 64

Why do scale-in traders need to trade a small initial position size?

Answer 64

The total risk from all potential entries must not be greater than the risk on any single standard trade.

Question 65

In a strong breakout, what is the probability that the market will move X ticks in the direction of the breakout before it moves X ticks against it?

Answer 65

Between 60% and 80%.

Question 66

Why is it often more profitable to buy and hold one swing trade in a strong trend than to scalp it repeatedly?

Answer 66

Most traders cannot re-enter consistently and end up missing large portions of the move.

Question 67

When is it acceptable to exit a swing trade for a quick, scalp-like profit on the entry bar?

Answer 67

When the market moves surprisingly quickly to a logical target or major resistance/support level.

Question 68

If you take a trade planning to scalp, you should rely on a scalp stop and not pretend it's now a _____ trade.

Answer 68

swing

Question 69

What kind of trading is characterized by computers using algorithms to take many small-profit trades based on every signal?

Answer 69

High-frequency trading.

Question 70

If you identify a great setup, should you scalp it or swing it?

Answer 70

You should not scalp it, because great setups often lead to swing trades, and you should try to swing at least part of it.

Question 71

What is a major reason for beginners losing money, related to confusing trade types?

Answer 71

They mix up swing and scalp entries and exits, for example, taking a swing setup but scalping out for a tiny profit.