Depends on market conditions and structures.
In some cases, a fool's game, in other cases, the only way to win.
In some cases, a fool's game, in other cases, the only way to win.
Breakout Trading - Smart Play or Fool's Game?
- Thread starter Money Trust
- Start date
Maybe a breakout method will work better in certain markets.
I've noticed that CL seems to make explosive moves that might better suit a breakout method.
I've been demo trading general price action methods that i've read about for a few weeks now.
With the German dax, i've been losing a steady 100ticks per day, using stops of 15-20 ticks.
Nothing seems to work on it, so i've decided to bin that particular instrument.
Trying NQ and some FX pairs now. Breakouts and other pricea action that I use seems to be performing a little better in comparison on these instruments
I've noticed that CL seems to make explosive moves that might better suit a breakout method.
I've been demo trading general price action methods that i've read about for a few weeks now.
With the German dax, i've been losing a steady 100ticks per day, using stops of 15-20 ticks.
Nothing seems to work on it, so i've decided to bin that particular instrument.
Trying NQ and some FX pairs now. Breakouts and other pricea action that I use seems to be performing a little better in comparison on these instruments
Depends on what it's breaking out of. As well as "the environment" (see the thread MarketAddict just started).
Incidentally, "trying" is not the same as testing, nor is "seems to be" the same as data collection and analysis.
Well i've done lots of observing. Recently been testing the various observations and price action (support becoming resistance, trendline breaks, doubletops/bottoms etc).
They don't appear to provide any sort of edge, but it's hard to be sure as, I have to do it all manually by going through old charts and it's hard to get a statistical significance. Hard to program (and thus properly test) lots of this stuff.
There's a few that did still look at least somewhat positive in my (limited) testing, and i'm now demo trading one of these ideas on the NQ. I'm trying to test about 100 instances with a mixture of replay and live data. (I'm upto about 80 trades at the moment)
I kind of fear running out of observations that I can test which will then leave me nowhere to go!
If you're testing several variables simultaneously in order to save time, you'll find that this would have taken far less time if you had tested each variable independently. There is also the possibility/probability that even if you find something that meets your standards of success, you won't know what contributed to that result.
I suggest also that if you're not also incorporating the contexts in which these breakouts are occurring, you will likely find that you have nothing reliable at all.
As with pullbacks, there are some forms of breakouts that I take and some that I wouldn't touch. Not all setups are created equal.
Anyone who's interested in this can always look at the month's charts I posted to the Foresight Thread, at the beginning. I attempted to show why some breakouts work and some don't, but this pretty much whizzed by most everybody. But it's at least there and done for those who can view it with an open mind.
The one's that don't work;
Runs stops
Meant to lull in impatient traders
Meant to scare out the weak - holding the intended direction
No supporting volume
Price improvement
One's that do work;
Have pressure beneath them (position established)
Meant to trap in..., weak.., with move traders (their exiting creates resistance)
Meant to trap out the hesitant
Accompanied with supporting volume
Watch = you can pick up on which way the position is being built (depending on how long price in the range) prior to the B/O
First question to always ask - why is price in / creating this range
RN