10/15/03

My models are all breakout driven. They give me points where I need to be long or short for a day.

Does this statement refer to a breakout from a price channel? Using daily data, intraday data? I have read in several places, here and elsewhere, breakout systems or methods of trading are the most profitable. So, I have tried to get an understanding of how these work. Until now, I haven't been very successful at implementing them, I think mainly because of reacting too slowly. But you seem to be implying that breakouts can be traded for an extended time on an intraday basis. How is this different than indentifying the trend and climbing aboard?

The trend days, as has been noticed by others on this site are not as generously available as before, so, if you can, I'd just like a description of how a breakout system is supposed to work. Most of the indicators I use are trend identifiers, even the stochastics are tuned to help with measuring trends. Thanks for the help, if you can give it.
 
I took some time to think this through. Simtrader's technique was a breakout system. I think the reason these haven't worked for me is lack of patience. There are times when that system would breakout after a creeping advance or decline, maybe half of the way through the move. I always wanted more of that move.

On the other hand, I can see how a breakout system can ultimately prove to be more profitable; if, this is a typical behavior of these systems then it is a much safer kind of trading than constantly seeking counter-trend trades, which I am trying to break myself of entering.
 
If you're going to use the "Bollinger Band BO" system, you have to have something that's trending and that a reasonably wide daily range. Given the fact that the ES and NQ aren't trending all that strongly and that the daily range has contracted, there are fewer BBBO trade setups. Test (reversals) and retracement strategies may be more successful for you.
 
Quote from dbphoenix:

If you're going to use the "Bollinger Band BO" system, you have to have something that's trending and that a reasonably wide daily range. Given the fact that the ES and NQ aren't trending all that strongly and that the daily range has contracted, there are fewer BBBO trade setups. Test (reversals) and retracement strategies may be more successful for you.
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Thanks DB, I'll give it some time.
 
dixon, breakout system are very hard on your emotions. steep drawdowns. even harder when trying em intraday on.. .say ES:) maybe dbphoenix knows to the contrary i dunno
 
Thanks Traderkay, from my reading I've seen there are different ways to judge the breakout...Simtrader's was the first I actually charted and tried to follow. Regardless of his style, which was abrasive as hell, he had something to say.

For now, I'll most likely be following your's and DB's lead and just checking them out to learn what I can rather than rush to trade them.
 
It is interesting to read that even traders like acrary, whose genius (a compliment) is to find statistical anomalies and cash in from them, trade breaks. I can't think of anything I have read this year, here and elsewhere, free and purchased, that doesn't enter on a break.

Someone posted that 5 min 60 min method where the originator said the draw a midline at the 5 min bar, etc etc. The entry was a break of the 60 minute bar. Crabel's ORB is a break. We have lots of discussion here on ET about the 30 min break. The geometric patterns enter on a break. The MSH/MSL stuff enters on a break. The NR/ID enters on a break.

I would think the pairs trading, spread tradng and options selling wouldn't enter on a break necessarily because of the goal of those methods.
 
Quote from inandlong:

It is interesting to read that even traders like acrary, whose genius (a compliment) is to find statistical anomalies and cash in from them, trade breaks. I can't think of anything I have read this year, here and elsewhere, free and purchased, that doesn't enter on a break.

Someone posted that 5 min 60 min method where the originator said the draw a midline at the 5 min bar, etc etc. The entry was a break of the 60 minute bar. Crabel's ORB is a break. We have lots of discussion here on ET about the 30 min break. The geometric patterns enter on a break. The MSH/MSL stuff enters on a break. The NR/ID enters on a break.

I would think the pairs trading, spread tradng and options selling wouldn't enter on a break necessarily because of the goal of those methods.
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YOU HIT THE NAIL ON THE HEAD DUDE!:)

p.s. I'ts not necessarily what you trade but rather how you trade it???:)
 
Quote from acrary:

Looks like some funds really wanted to sell early this morning. I've been watching the PREM get so low the buy index arb. programs were buying while the market was dropping. Somebody must really want to sell if they're that desperate. It'll be interesting to see if the market makes up much ground when the selling wave stops.
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i guess not ;)
 
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