High probability Breakouts

bigspeculate · Mar 16, 2017

Breakout strategies tend to have low win rates, due to markets trading in a range most of the time. Failed breakouts abound.
Is a high probability breakout or trend following method even possible? I mean one that is sustained, not promising for a while only to fizzle out.

just21 · Mar 16, 2017

Research gaps.

comagnum · Mar 16, 2017

Breakout strategies tend to have low win rates

True - however, a seasoned swing trader typically expects approx 10% of all their trades to account for their profits in a given year. When you lean into your winners with size and aggressively manage your trades so as to take only small loses when you have the smaller size on than you can do very well. You do need some capital to pull this off, lot's of patience, and be very good with risk/trade mgmt.

eganon69 · Mar 16, 2017

I trade breakouts all the time. Sometimes I anticipate them and other times I wait for breakouts. Depending on the chart patterns and momentum and volume traded I may wait for retracement to the breakout point which happens quite often. All breakouts I trade are in the setting of a trend following system, like breakouts of a continuation pattern within a trend or similar setups.

CyJackX · Mar 16, 2017

bigspeculate said:
I mean one that is sustained, not promising for a while only to fizzle out.

This seems like asking how long is a piece of string. All strategies and patterns fizzle out after a while, so it depends.

hmcp · Mar 16, 2017

why not trade failed breakouts since they fail more often then not .

ironchef · Mar 16, 2017

hmcp said:
why not trade failed breakouts since they fail more often then not .

Because of nonlinear payout vs nonlinear loss.

Trader13 · Mar 17, 2017

There are no obvious high probability technical setups. Any indicator or pattern setups that work are probably a very well guarded secret.

The obvious highest probability breakout setups are for events, e.g. earnings reports, FDA approvals, M&A announcements, etc. The rub is when you have a high probability event that everyone is aware of, the cost of the trading instrument (options for a long straddle/strangle) rises to offset any edge.

Just another reason why successful trading is hard, as if you needed me to tell you.

JSOP · Mar 17, 2017

bigspeculate said:
Breakout strategies tend to have low win rates, due to markets trading in a range most of the time. Failed breakouts abound.
Is a high probability breakout or trend following method even possible? I mean one that is sustained, not promising for a while only to fizzle out.

Breakout strategies do work but they have to be backed up with REAL reasons for the breakout. Technical breakout rarely works out though because no prices break out just because the price all of sudden feels like testing certain resistance/support levels.

pinabetal · Mar 17, 2017

bigspeculate said:
Breakout strategies tend to have low win rates, due to markets trading in a range most of the time. Failed breakouts abound.
Is a high probability breakout or trend following method even possible? I mean one that is sustained, not promising for a while only to fizzle out.

Aprox 70 to 80% of B.O's From a range fail. So, one strategy is sell at top of range and buy at bottom. One technique. When a breakout does occur wait for a pb that stays out of the range then a resumption of the b.o. before taking a position.