Question for the Technicians and Traders out there?
- Thread starter mschey
- Start date
I dont believe there is a correct answer to this question. I've traded various moving average systems and each one had its own little rules and nuances. I personally would wait for a confirmed break. If its on a daily time frame, a full day close above the moving average before changing my position.
WOW. i know i always give you a hard time...but that is the height of ignorance.
there is a very good reason why EVERY trading platform has moving averages. Look at any seasoned traders setup and you will see moving averages as a default 95% of the time.
I would say any trader that doesnt use moving averages to some degree is probably useless.
Wait for the breakout above the 50. Odds are many eyeballs are on the same trade. Remember, as a small trader we all want friends, we want friends to enhance our basic TA trades.
A price rise above the 50 ma will possible have many short sellers stops in the area above the 50 ma, as those are hit price should give a trader a few ticks profits as a cushion in the new long. Correct? Ok, now you are in, you want more, but you realize this breakout above the 50 needs new longs to sustain the move because once the stops are run the new longs will need price to attract new longs to keep the move alive.
If no new suckers (opps), longs are attracted to the breakout, then price will fall back to the breakout spot and now will be viewed as support. Your STOP is where you entered, (mental, good real traders are experienced enough to honor mental stops ) if after the stops are run and your small profit goes puff.
OK, lets say you just scratched a long and price now has RETESTED the breakout. this is not a failed trade, it is simply a FILTER. you have just filtered the breakout and are looking for another breakout above the 50 ma. Many times a mkt will test a resist/support breakout 3 times before the tests attract the big boys/girls to throw in their orders and then it is off to the races. many small traders that lost on attempts by chasing the breakouts are now totally discouraged and sit in disbelief as the run takes off and leaves them twiddling the thumbs and kicking the pooch.
IF INDEED , price falls back into say a range after a false brkout, there is a good chance the price will go back and test the other side of the range.
have fun, but "be careful out there".... this is a couple tidbits about breakouts, there is more. ..
:eek:
A price rise above the 50 ma will possible have many short sellers stops in the area above the 50 ma, as those are hit price should give a trader a few ticks profits as a cushion in the new long. Correct? Ok, now you are in, you want more, but you realize this breakout above the 50 needs new longs to sustain the move because once the stops are run the new longs will need price to attract new longs to keep the move alive.
If no new suckers (opps), longs are attracted to the breakout, then price will fall back to the breakout spot and now will be viewed as support. Your STOP is where you entered, (mental, good real traders are experienced enough to honor mental stops ) if after the stops are run and your small profit goes puff.
OK, lets say you just scratched a long and price now has RETESTED the breakout. this is not a failed trade, it is simply a FILTER. you have just filtered the breakout and are looking for another breakout above the 50 ma. Many times a mkt will test a resist/support breakout 3 times before the tests attract the big boys/girls to throw in their orders and then it is off to the races. many small traders that lost on attempts by chasing the breakouts are now totally discouraged and sit in disbelief as the run takes off and leaves them twiddling the thumbs and kicking the pooch.
IF INDEED , price falls back into say a range after a false brkout, there is a good chance the price will go back and test the other side of the range.
have fun, but "be careful out there".... this is a couple tidbits about breakouts, there is more. ..
:eek:then AFTER a nice leg did the deed, you watch for a retrace. many of the previous traders that lost a couple times on the false breakouts now were convinced the move was for real and now chased the mkt, they get filled just in time for a NORMAL retrace. "ya gotta love this game" MKTS like to run in 3 legs (Dons, power of three again ).
The mkt TALKS to you, listen and you will make money. DO NOT REINVENT THE WHEEL. Listen to the mkt, and then you will ride in style. ..
Anyone that says moving averages do not work needs to QUIT trading and reread Edwards & MaGee. i am not a math guy, but that is not to say math is not a science, it is. trading is more art form once the trade is filled.
can it be easy, you bet. but it takes a lot of screen time.
DONE
The mkt TALKS to you, listen and you will make money. DO NOT REINVENT THE WHEEL. Listen to the mkt, and then you will ride in style. ..
Anyone that says moving averages do not work needs to QUIT trading and reread Edwards & MaGee. i am not a math guy, but that is not to say math is not a science, it is. trading is more art form once the trade is filled.
can it be easy, you bet. but it takes a lot of screen time.
DONE