Trading breakout, pullback question

[Redneck]

I always get my ass handed to me when it is just a consolidation expansion,

Add some insult to injury - may as well

No patience
No discipline
No methodology
No rules
No process
Not reading price / the chart correctly
Not creating proper context
Not trading within said context
Not deciphering the PA leading to the FBO
Not trading what the mkt is giving / the environment it in
Not learning from what isn't working
Not adapting
Anticipating

RN

 

[Buck95]

The "breakout pullback" pattern can be an outstanding trading pattern. Notice that I said it "can be"... given the right context. But you must have the discipline to really understand and apply the pattern.

The context leading up to the pattern is all important. Research "Trader Vic's 1-2-3". Here is a decent explanation. http://www.thepatternsite.com/123tc.html

-Al

 

[pauri]

It's all 50/50. You make money one day, you lose another. Learn to accept that. There is no winning system.

Weis wave can help identify turning points and breakouts. One has to have a hang of it about the bullish/ bearish wave volume diversion or dryup. Not always successful but its really worth trying.

 

[fordewind]

i have been trading breakouts, mainly consolidation ptterns, triangles, wedges etc. I always wait for it to breakout, retest the SR line, wait for some rejection and enter.

I always get my ass handed to me when it is just a consolidation expansion, I always look for momentum from the swing leg that it is going to breakout from.

What other things do you look for? I always trade the first candle that breakouts and closes outside the SR/TLs, then take the next candle that retests it, with confirmation on the 5 minute. I stick to the hourly chart.

What is consolidation expansion?

 

[llIHeroic]

Wanted to share my 2c. I think you're asking some good questions. I second the necessity of proper context. A breakout is a nice, simple criteria for an entry. You could say that all every single one of my entries triggered by a BO of some form, at least on a small enough level. But which direction I'm looking to open a position into, and what comes after the BO are what makes or breaks the trade for me.

Pullback -> BO from the pullback is a great way to enter because it allows the opportunity for very conservative risk to be taken on a trade. And you get the benefit of initial momentum very often providing some immediate MFE. So a two major considerations that are involved with other entries are rather easily solved.

From here it sounds like you need to work on filtering out contexts that don't result in favorable trades. If by consolidation expansion you mean a slow drift into your trade direction before volatility comes back in to the opposite side, maybe you should ask yourself how the actions resulting from your entry differs from successful trades, if you can't distinguish the entries from one another. Perhaps there is a confirming sign of some sort you could require within a certain time interval, or a certain price behavior that you need to see before x points MAE in order to keep your trade on.

If you post actual examples perhaps some of us might be able to give you more specific ideas, but with what you've asked so far that's the best tidbit I feel I can provide. Hope it helps.

One more thing actually, in the middle of writing this post, I put on a trade, so I was waiting for it to conclude in order to provide you a rudimentary example of what I mean. Pace is so low today so the trading opportunities are quite meager, but I decided to trade the breakout of this morning's low of 2175 on the ES.

So I shorted at 14:20 mid-way into the BO leg down, and my max risk on the trade was assigned to 2177. Come 14:24; the characteristics of the leg down qualified to keep my max risk on and not to close the trade early. So I waited, and finally we got what I classified as another leg down ending 1506. The characteristics of this leg didn't gate another continuation for me, so I exited after my defined trend sequence completed.

Despite the possibility of further downward movement I no longer analyzed that sufficient criteria existed to keep the trade on. Despite some general intuition in the broad context which led me to decide to take the days low's BO trade, every decision I made was based off tested statistics and a pre-set plan. To me this is what successful trading entails. Over the long haul this trade will have positive expectancy even though this time it didn't amount to much.

 

[jpvil123]

Wanted to share my 2c. I think you're asking some good questions. I second the necessity of proper context. A breakout is a nice, simple criteria for an entry. You could say that all every single one of my entries triggered by a BO of some form, at least on a small enough level. But which direction I'm looking to open a position into, and what comes after the BO are what makes or breaks the trade for me.

Pullback -> BO from the pullback is a great way to enter because it allows the opportunity for very conservative risk to be taken on a trade. And you get the benefit of initial momentum very often providing some immediate MFE. So a two major considerations that are involved with other entries are rather easily solved.

From here it sounds like you need to work on filtering out contexts that don't result in favorable trades. If by consolidation expansion you mean a slow drift into your trade direction before volatility comes back in to the opposite side, maybe you should ask yourself how the actions resulting from your entry differs from successful trades, if you can't distinguish the entries from one another. Perhaps there is a confirming sign of some sort you could require within a certain time interval, or a certain price behavior that you need to see before x points MAE in order to keep your trade on.

If you post actual examples perhaps some of us might be able to give you more specific ideas, but with what you've asked so far that's the best tidbit I feel I can provide. Hope it helps.

One more thing actually, in the middle of writing this post, I put on a trade, so I was waiting for it to conclude in order to provide you a rudimentary example of what I mean. Pace is so low today so the trading opportunities are quite meager, but I decided to trade the breakout of this morning's low of 2175 on the ES.

So I shorted at 14:20 mid-way into the BO leg down, and my max risk on the trade was assigned to 2177. Come 14:24; the characteristics of the leg down qualified to keep my max risk on and not to close the trade early. So I waited, and finally we got what I classified as another leg down ending 1506. The characteristics of this leg didn't gate another continuation for me, so I exited after my defined trend sequence completed.

Despite the possibility of further downward movement I no longer analyzed that sufficient criteria existed to keep the trade on. Despite some general intuition in the broad context which led me to decide to take the days low's BO trade, every decision I made was based off tested statistics and a pre-set plan. To me this is what successful trading entails. Over the long haul this trade will have positive expectancy even though this time it didn't amount to much.

I don't understand this. I see more bullish action within that upward trending consolidation. why would it be sold here? if anything wouldnt a buy at the bottom of the consolidation be better?

 

[llIHeroic]

I don't understand this. I see more bullish action within that upward trending consolidation. why would it be sold here? if anything wouldnt a buy at the bottom of the consolidation be better?

Perhaps my reply got a bit too wordy. The BO down through the day session low was the criteria for my short. Essentially, the "buy" signal at the DB just past 1500 signaled the end of my short. I could've reversed long as well at this point but I decided not to. HTH.