Trade review - why GDX breakout failed in March 2014

A

ACUK

Hello,

I was reviewing my trades for 2014 - one in particular where I got stopped out in GDX in March 2014 - see chart.

I bought at the selected line on the chart, but it then bombed.

Can anyone see technical analysis reasons for this? --- as I am learning and am wondering if I missed an obvious sign?

Thanks!

GDX qn.png
 
ACUK said:
Hello,

I was reviewing my trades for 2014 - one in particular where I got stopped out in GDX in March 2014 - see chart.

I bought at the selected line on the chart, but it then bombed.

Can anyone see technical analysis reasons for this? --- as I am learning and am wondering if I missed an obvious sign?

Thanks!

View attachment 143576
More...


U bought at where the blue vertical line is and stopped out where the red arrow is pointing?
 
to ACUK:
I have decided to do some trades and moved with markets... sry. You need to watch what big guys are doing. And be aware that sometimes decision is not made up from charts...
 
Hi - I bought on the blue line and stopped out 5 bars later when it closed beneath the blue line bar.

How do I watch what the big boys are doing?
 
You should go to bar and pubs with them... Sometimes they will tell you, what their plans look like :D

Or you should do statistical research of markets and exploit all possible oppornuties... You should focus rather of whole baskets of securities and not only on one market. This is the way how I have succeeded.
 
ACUK said:
Hello,

I was reviewing my trades for 2014 - one in particular where I got stopped out in GDX in March 2014 - see chart.

I bought at the selected line on the chart, but it then bombed.

Can anyone see technical analysis reasons for this? --- as I am learning and am wondering if I missed an obvious sign?

Thanks!

View attachment 143576
More...

Most "breakouts" are fake. The pros fade them, the amateurs chase them. That GDX "breakout" was just a typical trap for the bulls (notice how quickly the price went the other way).

To trade breakouts successfully you need to confirm the trade with other criteria. Unfortunately, it takes a LOT of chart reading experience to be able to do that consistently.

So keep studying those charts day and night and one day you will get it...that magical aha moment.

aha-moment.jpg
 
Last edited:
ACUK said:
Hello,

I was reviewing my trades for 2014 - one in particular where I got stopped out in GDX in March 2014 - see chart.

I bought at the selected line on the chart, but it then bombed.

Can anyone see technical analysis reasons for this? --- as I am learning and am wondering if I missed an obvious sign?

Thanks!

View attachment 143576
More...

Hi ACUK,

The reason this breakout failed is because neither of the two environments for successful breakouts was in play on this chart.

Successful breakouts (a significant price move in the same direction as, and equal to or greater than, the previous significant price move) most often work in a well-defined trend or out of narrow range consolidation.

What you have on your chart is a very wide range. The narrow range consolidation in late Feb/early Mar did not occur in a well-defined uptrend. In other words, the rising trend line drawn across the Oct low and the higher Nov low was quickly broken downside and price dropped significantly.

Because there’s no well defined uptrend, the narrow range consolidation breakout you traded was more likely to fail. The good news is that if you bought the break out of that consolidation, your stop loss would be small.

The safer way to play a breakout setup like this is watch the strength of the breakout, wait for a pullback to the breakout level, then trail a buy stop as long as price doesn’t close back inside the breakout level. A long trade would never have activated using this common strategy.

Here are several examples of strong breakout setups:

http://www.daytradingcoach.com/daytrading-technicalanalysis-course.htm#6

Notice that there has to be either a well-defined trend in place or an existing trend line has to break and price has to pull back to the breakout zone and turn back in the direction of the TL break (breakout pullback trend reversal setup). These are the higher odds breakout setups.

Price coming to test a previous high or low in a very wide range is far more often a failure on the initial attempt.

I hope this helps!

NoD
 
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