What do you guys think of breakouts?

[Spectre2007]

old s/r/trendlines video using demo account. Need to download since .wmv file and use media player to play.

http://www.screencast.com/t/CPdTSn4rmp

 

[FreakofNature]

Be smart, trade breakouts AGAINST the trade, and FADE them, in this line of business you want the most number of odds in your favor to succeed.

 

[TheRumpledOne]

 

[murray t turtle]

Do you guys think that trading based on breakouts/breakdowns of trendlines, and or support/resistance is a statistically viable approach, that is with an edge.

Obviously it will depend of time intervals, the 'significance' of a price point, and the instrument traded, but do you think that with the right variables and the right conditions it is a viable approach long term?

%%
Yes CapitalManage;
bull market uptrend+ but below 200day moving average,is a bear market, downtrend is different. Put another way how much of the 7 or 8+/ year uptrend move did you get????Good question.[AS they say in Chicago---the smarter you are-- the longer it takes. Funny + true]

 

[Robby Luca]

It is a viable approach... it's a start...

 

[wrbtrader]

Do you guys think that trading based on breakouts/breakdowns of trendlines, and or support/resistance is a statistically viable approach, that is with an edge.

Obviously it will depend of time intervals, the 'significance' of a price point, and the instrument traded, but do you think that with the right variables and the right conditions it is a viable approach long term?

Breakouts/breakdowns of trendlines, and or support/resistance are not viable trade signals all by themselves.

What is meant is that you still need a specific trade signal that differentiates a breakout from another breakout or a trendline from any other trendline or a trade signal that differentiate a s/r level from any other s/r level.

For example, pretend your breakout with a simple trade signal like a volume spike > 5 previous volume intervals. Therefore, if you see a breakout and it does not meet the volume rule...that particular breakout is not good to go for trading. Then there's different types of breakouts...someone documented over 50 types.

Therefore, to determine if something has a "viable approach"...you have to test all the moving pieces (not just some of the moving pieces)...that includes the breakout with the volume variable. Too many people just test ANY breakout and then announce they don't work. Same with ANY trendline or ANY s/r level. Just the same, they test one specific type of breakout and if it doesn't work...they announce that ALL breakouts don't work.

There's been some decent discussions here at the forum by others about what type of trade signals they use with breakouts, trendlines and s/r levels. Maybe worth your time to research and test.

 

[murray t turtle]

You already know the answer to your question. Price action can disperse around a vector, angled up or down. When those vectors change, it marks a break in:

1) trendline
2) moving average cross over
3) travels within ATR
4) hits resistance or support, top or bottom of ATR
5) breaks or bounces off S/R, top or bottom of ATR

,.... all catalyzed within a time interval based on a event or orderflow given the market dynamics..

above is concise description of all price action.

if you understand the above, statistically where would you enter a trade to minize stop loss being hit or even better when would you enter a trade.

%%
Good ones;
+ study monthly candle charts,or barcharts, even if you dont hold every trade a month or many months, helpful anyway..................................................................