The thing about trading breakouts...

T

trader99

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.
 
I think patience is the key to trading breakout successfully, true breakouts are always very clear, just wait for it. The disadvantage is that you miss a lot of move while waiting but that is better than getting kicked out before the real breakout.
 
I'm trading mini breakouts in forex that show trend resumption. I'm finding I need to trade all the opportunities - no profit comes from trying to focus in on only the best or lowest risk or highest potential. This means my positions have to have super-small capital risk - about 0.5% would be average. It also means (as all trend-followers find) I can't focus on 1 or 2 targets, I have to scan all the major currency pairs and take every trade I can see that fits the mould.

Its a real test to ride out multiple 0.5% losers even though the losses are tiny, but the potential rewards form the winners are excellent.

I don't think this could be called smart trading so probably deeply counter to our normal western way of thinking - specialise, become expert, focus, targeting and so on. But its paying so what the eck.
 
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.
More...

I do it much different, automation waits for retail to do breakouts, like you did, then system waits for price action to develop a pattern- then when market pushes price other way so retail either gets stopped out for loss or breakeven, system enters and if already in trend, size is increased. And most traders have no clue on how to draw tri-angles, actually rules, or maybe I have actual rules. And you develop long enough, there are five different ways to use on tri-angles, but the best is watching retail take loses over and over again, by the time they don't want to be left behind, they go to the market and push market higher to my reversal areas. You can see it in volume. Winning percentages don't have to be low, concentrate on getting losing percentages low and drawdowns. Only time do actual breakouts are on daily or weekly timeframes and then I hedge. Tada
 
Breakouts are use by institutions to sell at the highest possible price ,,, be careful..!! If you want to enter do it only after the 1st pullback after the breakout....
 
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.
More...
Trading breakouts it's so 90's man. the markets evolved from that times. now you need more confirmations that the breakout is real. I use Bookmap to see clearly on the heatmap if there is an exhaustion of sellers/buyers at support or resistance and the level of liquidity for more confirmation of a breakout.
 
cornerstone said:
Trading breakouts it's so 90's man. the markets evolved from that times. now you need more confirmations that the breakout is real. I use Bookmap to see clearly on the heatmap if there is an exhaustion of sellers/buyers at support or resistance and the level of liquidity for more confirmation of a breakout.
More...

@Baron You really should be charging this guy for being a Bookmap rep. He also needs it written in his signature.
 
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