Spydertrader's Jack Hershey Futures Trading Journal

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Over the most part of this week, I seem to have developed a phobia for formation breakouts.

That is I have seen a lot of FBO's of the formations that I seem to be not sure of taking the next potential formation BO due to chances it could fail.

I don't get that comfort feeling. I have posted some nice trades recently off the formation BOs but I don't have the confidence that I can replicate them all the time.

I have attached a snap shot of one from today. First we had the YM break out of a FBP and fail and form a lateral formation. The lateral formation on the YM also coincided with the ES forming a FBP and then both the YM and ES broke out of their respective formations only to fail again.

Is there a way to know if a breakout is going to fail? What I have been doing is enter on the breakout and go flat if the breakout fails and usually with a loss of 2-3 ticks but these tend to add up.
 

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pendents by itself is only a signal.

Like Gauvaman asked: What's the context ?

I would look at where the pendent was formed? near the LTL? or RTL?

If the pendent is on the RTL of a downtrend, am I looking for a BO? Are there other signals that would compliment such an anticipation?

I would also look at 20ma as a clue, and the distance of the pendent from the 20ma.

http://www.elitetrader.com/vb/showthread.php?s=&postid=1655946#post1655946


These are just my 2c. I have not aggressively traded the pendents. Your question is a good one; it forced me to do some critical thinking. I can see the possibilities, and have developed some preliminary ideas, I will put them to test this weekend.
 
I think we don't have any convincing evident tell us there is a forest level sentiment change until after the BO with increasing prv (red circled).

the B2B right before that is in the context of tree level. Do you agree?


<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1656385> [/B][/QUOTE]
 

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Quote from Tums:


Context
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I have not aggressively traded the pendents. Your question is a good one; it forced me to do some critical thinking. I can see the possibilities, and have developed some preliminary ideas, I will put them to test this weekend.
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I don't really trade off all the pennants. In both those trades, I was thinking pt3 up channels resulting in BO of the down channel.

In the first snippet, a successful break of the the ES FBP would have given a Pt3. Granted the taking the first break of the YM FTP would have been getting on the traverse from pt1 to 3, however the YM PRV was very high compared to prev bar so I was thinking chances of a successful BO was high.

In the second snippet, we had two FTT's form in the same down channel giving a potential pt3. I had annotated a B2B on the YM so a BO up of the formations on the ES and YM would be confirming the up channel.

Now my interpretation I have stated above might me wrong (but I don't think so) and if I am incorrect pls correct me.

I was aware that we are very close the the RTL and knew a FBO was a possibility and I am not surprised we did get FBOs. But would be nice to be able to access a breakout and be able to know if it will BO or FBO. At least being able to ID the FBO sooner means an opportunity to reverse/exit earlier.
 
In both your examples it seems that the low (green) volume was an indication that the first BO tentative (up) will fail. Then the BO occurred at the other end on increasing (red) volume.

Click the link to see the picture full size.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1656411 width=505>
Quote from bi9foot:

Over the most part of this week, I seem to have developed a phobia for formation breakouts.

That is I have seen a lot of FBO's of the formations that I seem to be not sure of taking the next potential formation BO due to chances it could fail. ...
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Quote from Spydertrader:

10-26-2007 ES Chart

- Spydertrader
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Great call on the 13:00 blue channel! I missed that PT1 forest channel (as I got caught up montoring the limb) and was not comfortable sliding the 12:00 bar down to the blue channel PT3 to compensate. Consequently, not having a well defined forest level channel, I got a bit deep into the rabbit hole. It would have definately helped me spot and act on the larger 15:25 FBO.

Also, the afternoon laterals were a bit muddy for me.

At my current skill level these forest level channels are key for helping me to act with confidence and missing them leaves me a bit dis-oriented with regards to outer bounds.

A rookie mistake on my part but that is why we debrief :)
 
Quote from ehorn:

A rookie mistake on my part but that is why we debrief :)
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Everyone makes errors from time to time. Absolutely nothing wrong with doing so - if we can learn valuable lessons from our errors in the process. If you want to see really fugly channels, take a look at some of the bizarre things I drew way back in Equities Journal One. Shudder. Nwbprop often said, "My favorite time of the day is the debrief. Here is where I learn so much." Use the debrief, not only to locate your errors, but also, to reinforce areas where things worked out exactly as designed. Positive reinforcement works wonders it turns out.

- Spydertrader
 
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