What do you think of BUY on Breakout strategy

[murray t turtle]

Welcome to ET.

Buying breakouts is a pretty decent strategy in a raging bull market. It can be frustrating when the market is in a range or backing and filling. As you've noticed, people who are already long the stock often use a new high as a place to lock in some profits.

Trying to pick bottoms can also be dangerous, as what looks beaten down often gets beaten down even more.

If it was easy, everyone would make a lot of money, but few do. My advice is whatever you do, be disciplined and don't let any one trade go too far in the red.

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Mr Bua8484;
''WELL, its a bull market you know'' That's what ''old turkey'' said when ever someone would try to get him to sell his longs in a bull market,LOL

Actually I like a good bull market/ Up-trend ;;;;;
+ good bear market/downtrend
Frankly,, study SPY on 10year+ charts, 3 year weekly donchian channels.....
Its a very extended, old bull market, + late in the year.

Sure it[bull market] '' could more extended '';;;;; '' its a bull market , you know''
I agree with AAA on this ''not a raging bull market'' SPY took out a monthly low recently, sell volume looks better than buy volume on longer term charts.QQQ has raged recently, but still very old , EXTENDED UP-trend.

Wisdom is profitable to direct;
2001 Traders Almanac[SELL in MAY + go away] + newer editions could help you, realize frankly its a risky, risky bull market, when SPY or any takes out a MONTHLY LOW=look out below.

NOT a prediction;; markets don't work that way.Hope this helps, it helped me

 

[buwa84]

There is another type of entry you can backtest, I call it delayed entry. Wait for the breakout first but don't enter as many are doing exactly that, then at certain percentage say 50% of last pivot low to recent highs to enter on a limit order. I will still use the same exact risk between breakout price to lows minus so much, so I am not going to be risking less, However, the downfalls will always be you miss out on breakouts that won't retrace the 50% and just keep going up and you will of course nail every loss. But if a newer trader, I would go with this delayed enter as it cuts down on over trading, false signals, lack of knowledge as well cause not all breakouts are good to take. Too often from the breakout point to lowest low of area to put your protective stops is beyond a normal swing, price breaks out trapping the inexperienced and Pros force it back down to just beyond these lows to hit the stops (why I don't place stops just below these lows) or form equal lows and then takes off in breakout direction. Also, one thing to keep in mind is "time", say price breakouts of lowest high and won't retrace that 50% but just sits there above this 50%, I use a time rule of so many bars that I can get into a trade or I pull order. I don't like price drift unless selling options. Also, bear in mind timeframe, for ME, this entry works for daily, weekly, monthly bar charts, but I generally only do long term trading on weekly bars cause I am seeking 1-2 years in a trade, much less trading, I buy only stocks that offer dividends and sell short stocks that don't offer dividends.

Handle123, How do you make sure that these are retracement and will bounce back. Be'cos there is possibility that this might be reversal and going into a down trend

 

[lildimsum7]

Why?




LOL - That's a useless statement. Earnings = High Volume


EDIT: I see this was my 500th post. I figure this would be a good time to Log Out for good from ET.

What? Just because something's up on a good earnings call doesn't mean the volume is much higher. And random breakouts tend to fail badly. Just look at CLRO and GSB recently. Psychologically, traders AND investors would feel better selling at random breakouts. They're thinking should be along the lines of: "the stock is up 40%+ in a short amount of time, but no change to the story. therefore, I should take profits while I can because the market price can just as easily fall." then, like clockwork, selling breeds fear and more selling back to a psychological price floor.

 

[Visaria]

Much of my buying is done on breakouts. Sometimes i buy retracements too. The main thing is to be in the trend.

 

[HarryHindsight]

Enjoyed the Jessie Livermore a few posts back about "this being a bull market, you know".

I can pick out long periods of time where buying at fib 50% retracement in a trending market would make you a millionaire.

The "Turtles" famously made some big money on the breakout strategy until it stopped paying out.

So I think certain approaches seem to be in vogue one day, and out the next.

Personally I feel more comfortable on buying profit taking pull-backs.

Perhaps something along the lines of these 5 S&P stocks that recently caught my eye (purely on technical reasons).

 

[Wide Tailz]

Handle123, How do you make sure that these are retracement and will bounce back. Be'cos there is possibility that this might be reversal and going into a down trend

If it retraces beyond your risk limit you sell. You have a usable method if the probability of wins multiplied by avg. win amount is greater than probability of loss times risk amount.

This is the essence of Master Trading. You will lose, and that is where the money is made.......... :eek:

 

[galvinlee888]

There is another type of entry you can backtest, I call it delayed entry. Wait for the breakout first but don't enter as many are doing exactly that, then at certain percentage say 50% of last pivot low to recent highs to enter on a limit order. I will still use the same exact risk between breakout price to lows minus so much, so I am not going to be risking less, However, the downfalls will always be you miss out on breakouts that won't retrace the 50% and just keep going up and you will of course nail every loss. But if a newer trader, I would go with this delayed enter as it cuts down on over trading, false signals, lack of knowledge as well cause not all breakouts are good to take. Too often from the breakout point to lowest low of area to put your protective stops is beyond a normal swing, price breaks out trapping the inexperienced and Pros force it back down to just beyond these lows to hit the stops (why I don't place stops just below these lows) or form equal lows and then takes off in breakout direction. Also, one thing to keep in mind is "time", say price breakouts of lowest high and won't retrace that 50% but just sits there above this 50%, I use a time rule of so many bars that I can get into a trade or I pull order. I don't like price drift unless selling options. Also, bear in mind timeframe, for ME, this entry works for daily, weekly, monthly bar charts, but I generally only do long term trading on weekly bars cause I am seeking 1-2 years in a trade, much less trading, I buy only stocks that offer dividends and sell short stocks that don't offer dividends.

This is call buy the pull back, aka H1 or H2 buy, nodoji, right?

 

[smallStops]

Let me give you a piece of advice. Take your $1000 and buy ... ! At least that way you will be happy for a few hours and will know where your money went.

For once D) Satan's helper advice had some content that were good.
Regarding what to do with your money - if you have worked your psychology/spirtuality thus developed a high respect for yourself, you will discover how buying what he suggests is about looking to destroy yourself down the line, and a demonstration of some self-loathing.

So take your grand, and go and enjoy it with your family ( parents, siblings, cousins...) : book the whole lot to a theater show + restaurant + book a "show off car with chauffeur" to transport your whole family during this going out offered by you. Book a photographer if you can to seal the event.

Now for the trading : before putting one cent of real money in the market, do yourself the favor of taking 1000 trades of breakout , keep a record of everything, keep a fixed number of shares.

 

[allenrodgers]

Well, as of my point of view I wouldnt rely on it too much. I have noticed the half hour reversal to be fairly common. So even if you did buy a breakout of the 15minute range, you are running right into potential resistance.