Breakout Trading - Smart Play or Fool's Game?

Breakout Trading - Smart Play or Fool's Game?

  • Yes

    Votes: 11 78.6%

  • No

    Votes: 3 21.4%
  • Total voters
    14
  • Poll closed .
I am of the belief that breakout trading is a fool's game. Trading the breakout itself, I mean. When breakouts occur, one would have already been in the trade at the bottom of a base area (for a long position) and the reverse for a breakdown. I've made more money fading breakouts than betting on them.

I neglected to say this in the opening post because I didn't want to create any biased replies.
 
Past 3 days has certainly been a good time for breakout trades if you happen to have been in SRPT. Thank you Mr Market!
 
When a market is in a trend, getting into consolidation plays is the way to go. Flags, pennants, etc, with tight stops, these offer good risk to reward. Also trading breaks of levels/trendlines is also fine, the stronger the level the better. Watch out for spikes above a key level with high volume leaving a wick, usually these are stop hunts and you have trapped trades, excellent opportunity to fade. Nothing to it except getting screen time and making a strategy of your own. Listening to other people's opinions wont get you far.
 
Breakouts are very tough to trade, IME. Only the small minority take off like a rocket. Most either fail, retrace, or undergo a prolonged retracement. The question becomes which ones will simply take off? CL likes to take off. 6 years ago, breakouts in FX were great. Now, not so much. The typical pattern is breakout > retracement (2B) > resumption. The retracement can be either shallow or protracted. How does a trade know x level will break out but not z?

Redneck says he knows. Be great if he could post some examples :)
 
There's no way in hell i'd ever trade with buy or sell stops waiting for a breakout these days. There are just way too many retraces, fake outs, and other "liquidity gathering" exercises that go on for it to even be viable in my eyes. I'd much prefer to get in at a top or bottom, stop hunt, or other area where I feel the "bullshit risk" is diminished.
 
achilles28 said:
Redneck says he knows. Be great if he could post some examples :)
More...

What is it exactly - that I've said I know A28 (I'm extremely curious about this..., as it'll tell me how you (and possibly others) interpreted what I write)


And you want me to post examples - cool

Of what - B/Os that worked..., or didn't work - something else perhaps???


And since it would all be after the fact crap

I could tell any story I wished

Hell.., for that matter I could pick only perfect examples of each to post


How should we resolve each of these aspects A28

===============

Now..., if you think it better I post real time - I can't..., it takes all my focus to trade

How should we resolve this

==================

One other aspect that needs resolved before any thing meaningful can come out of me posting examples


Some times..., it (any / all of it) works

Other times..., it (any / of of it) breaks down

Some times - that which breaks down (it) - leaves a clear / distinctive read of where / how/ why - it broke down

Other times - that which breaks down (it) - is completely covered up by the subsequent PA

And the exact same holds true for the times when it works

How do we resolve this


Show me one example of something working - I can show you thousands where it broke down

Show me one example of something breaking down - I can show you thousands where it worked

=======================

I've repeatedly stated unequivocally - static (historic) charts are dead to me

Yes - I can pick up on the obvious things from past charts - and build context

But just how price got to where it is - and where the BSD plan to take it next

I need to see the PA happening real time - in order to read it / pick up on it

======================


In a perfect PA environment - we'd all be rich

And far too many seek out / need that perfection

I don't delude myself about PA ever being perfect - it just needs to be trade-able (and fact is - it is not always trade-able for me)


===========


I am not opposed to answering questions..., helping out where I can..., showing examples.., or whatever

It the main reason I hang out here in the first place


I just don't want to get in a pissin match about any of it..., set false expectations..., or bullshit ourselves about the limitations..., or what someone knows or doesn't

(just got a sermon from someone who purportedly knew something - instead of a straight up answer - I wish to be preached to - I'll go to church)


Anyway


Let me know how we get there A28


Thanks :)
RN
 
It seems to me that when day trading you gotta know when to jump in, however when longer term position tradnig you should wait for confirmation. Some might call this chasing the price.
 
Redneck said:
What is it exactly - that I've said I know A28 (I'm extremely curious about this..., as it'll tell me how you (and possibly others) interpreted what I write)


And you want me to post examples - cool

Of what - B/Os that worked..., or didn't work - something else perhaps???


And since it would all be after the fact crap

I could tell any story I wished

Hell.., for that matter I could pick only perfect examples of each to post


How should we resolve each of these aspects A28

===============

Now..., if you think it better I post real time - I can't..., it takes all my focus to trade

How should we resolve this

==================

One other aspect that needs resolved before any thing meaningful can come out of me posting examples


Some times..., it (any / all of it) works

Other times..., it (any / of of it) breaks down

Some times - that which breaks down (it) - leaves a clear / distinctive read of where / how/ why - it broke down

Other times - that which breaks down (it) - is completely covered up by the subsequent PA

And the exact same holds true for the times when it works

How do we resolve this


Show me one example of something working - I can show you thousands where it broke down

Show me one example of something breaking down - I can show you thousands where it worked

=======================

I've repeatedly stated unequivocally - static (historic) charts are dead to me

Yes - I can pick up on the obvious things from past charts - and build context

But just how price got to where it is - and where the BSD plan to take it next

I need to see the PA happening real time - in order to read it / pick up on it

======================


In a perfect PA environment - we'd all be rich

And far too many seek out / need that perfection

I don't delude myself about PA ever being perfect - it just needs to be trade-able (and fact is - it is not always trade-able for me)


===========


I am not opposed to answering questions..., helping out where I can..., showing examples.., or whatever

It the main reason I hang out here in the first place


I just don't want to get in a pissin match about any of it..., set false expectations..., or bullshit ourselves about the limitations..., or what someone knows or doesn't

(just got a sermon from someone who purportedly knew something - instead of a straight up answer - I wish to be preached to - I'll go to church)


Anyway


Let me know how we get there A28


Thanks :)
RN
More...

Haha. Well said, RedNeck. Everything you said makes sense.

If something comes up in real-time....say off a longer term chart (15 mins++++) that could be watched developing over a period of hours to days, could you post it here? Give us a heads up? With commentary? Earlier in the thread you listed several factors implicated with BO successes and failures. I wasn't aware of those. Obviously you know more then me and many others here on playing BO's. As far as track-record or score-keeping, I don't care. I know even good setups fail and bad setups work, it's all a game of probabilities, not perfection. I'm not interested in scoring your performance or throwing stones. Just interested in learning something I don't know. I think the nature of BO's these days is they aren't too reliable, which implies they're very hard to read and get 'right'. But if anyone can lend more insight, I'm always willing to learn. Eternally a market student.

Wish I could offer more insight into BO's myself and contribute to the convo. But my whole trading approach was arrived at because I couldn't figure out how to trade breakouts. So i enter on the eventual pullback. One of the ways I trade, anyhow...
 
Primarily you need to determine if the market is trending or ranging in your designated time-frame(s) of choice because how you should respond to price action is directly correlated to such answer(s).

No assumptions, and always be on the look-out for surprises.

It's not simple, at least not simple enough to learn about it in textbooks or public forums.
 
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