The thing about trading breakouts...

Correct discounting of the future does not happen on day one.
Is a breakout with mostly techie participants ...does MS or GS play breakouts ? (Rhetorical)
Or is it fundies re-pricing a liquid stock , the concensus might be strong proved by no liquidity and a big gap up.
Has it found fair value on day one? Probably not . These can melt up and trend over a large time frame. These are rare and unlikely to be played by novices like me cause the entry looks pathetic but it may not pull back in a way I imagine in my dreams.
I have examples, but fondly remember Anaconda back in the depression.....no the other one.
 
i find you often get small fractal melt up/downs as well which can sometimes develop into the larger jackpot rollovers
 
trader99 said:
I've been watching and observing breakouts. It's superdangerous to countertrend trade a breakout even though the number of false breakouts outnumber a true breakouts.

Because when a true breakout happens, it's fast moving and violent!

I got in GC on a breakout. then it pull back. I got out really fast. Small losses. Then it came back then really ran.

So, if you want to trade breakouts then you gotta be willing to come back in the waters and test multiple times. The one time it will be a runner. I stayed out and missed a runner because I was afraid of a false breakouts or a violent pullbacks.

So the winning % is low but when you catch a runner it can be multiple of the risk. In some ways that's the definition of trend trading...

Seems so easy but not so easy to do. At least tonight I didn't countertrend this breakout. So I didn't get run over. Small incremental progress.
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im sorry to hear that missing a runner is devastating.
 
for me as scalper price action is the key to understand strong break outs and fake outs. there are subtle price action moves that will indicate an imminent breakout. But once it breaks out, chances of price coming back to the bracket is also high.
these days there are no strong break outs. the trendy breakouts are rare, unless you are holding for swings.
 
HolyGrailSeeker said:
If you trade breakouts your stop loss needs to be wider.
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My plan calls for a much tighter than normal stop on breakouts. Even then, I'm lerry of breakouts. I'd rather be late.

Perhaps what i need to more clearly quantify is, when does a breakout offically become a new trend range. I need a clearer rule there, and then plan on being late to the breakout (some might say avoid it).
 
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