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-   -   How do you trade breakout without bleeding to death? (https://www.forexfactory.com/showthread.php?t=558027)

Matts Micro Sep 21, 2015 4:52am | Post# 41

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IMO it makes no sense at all to follow ANY sort of methodology. There is no trend, there is no breakout, only the reality of your decision.
I disagree, my methodology is doing just fine. But each to their own, we are all individuals and every1's trading strategy's are unique.

Today's BO trade.
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TooSlow Sep 21, 2015 10:43am | Post# 42

MasterMind Thinking {quote} There is not 1 good reason. There is not 1 good excuse. That when a trade is in good positive profit... that for some ungodly reason, you have to close it with a negative loss. Gann's retracement level is at 50%. If it retraces over 75-80%>>> GTFO!!! Or you can commit all the trading sins available to man: Pray and hope that it will turn around Increase your Stop loss to provide more room Re-analyze everything to support your beliefs and dis-beliefs Re-enter as you try to catch the falling knives Hedge it Close...
Yes!

TooSlow Sep 21, 2015 10:48am | Post# 43

IMO it makes no sense at all to follow ANY sort of methodology. There is no trend, there is no breakout, only the reality of your decision.
"There is no trend" - This is a true statement. Trend is subjective. Two traders could disagree.

"There is no breakout" - This is a false statement. Breakout is objective. Price either stays between two levels or it breaks out of one of the levels. Two traders would always agree.

"only the reality of your decision" - IMHO, only the results of your decisions. Your entry and exit decisions.

Neio Sep 21, 2015 11:10am | Post# 44

IMO it makes no sense at all to follow ANY sort of methodology. There is no trend, there is no breakout, only the reality of your decision.
Replying to your quote but not directed at you.

I agree in part, we have to live with the "reality of our decision". The reality is what plays out and we have to accept when we enter a trade. The reality is that the market can and will go against us sometimes despite our best analysis. So if we decide to participate in the market the best we can do is to manage the trade with that reality in mind. Trouble is that in doing the analysis to enter we often have our own expectation of what should happen. This can cloud our judgement as to what is really happening and cause us to avoid taking the loss when we really should (very often before it hits our stop). So what can we do? We need to change our mindset to view the market as it is, chaotic, and trade with the expectation that anything can and will happen.

Here is an useful exercise for anyone interested in developing the mindset needed to manage a trade. I have added to my daily routine to help me maintain the correct mindset and to avoid being emotionally connected to the outcome of a trade and the loss avoidance that can accompany it.

With a demo account or a small live account. I flip a coin and roll a die to randomly decide whether I buy/sell(heads/tails) and which of six markets I will enter. Then I immediately enter based on this. This means I am entering the market completely randomly without any kind of analysis or preconception. It is then down to me to set my stop and manage the trade (reality) as best I can. This often means taking a loss quickly. This helps me to view the outcome of any trade as I should. As the entry is completely random I find that I am less committed to holding the trade if it goes against me. I find that the by doing this my mind starts to view all post-entry management the same, even with the best analysis the outcome is still unpredictable and I need to manage it ruthlessly when things don't go my way. This is then carried over to my live trading.

My normal trade analysis will do its best to give my trade the best chance (momentum, when NOT to trade) but the reality is once I enter anything can happen and I need to be prepared to handle that to protect my account.

As for trend I have my own definition of trend which is an extended push in one direction more than another. I believe the markets do trend but I am very skeptical of trends lasting and will jump off at the sign of any loss of momentum.

All the best

Neio

Sciurus Sep 21, 2015 12:27pm | Post# 45

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So, the top red arrows showing I did a long and cut loss, the bottom arrows showing I did a short and cut loss. Then finally last candle breakout and I did a long trade, start earning money. The problem is, on market swinging like the one I highlighted, how to avoid lost? Or, how do I know if it's ranging? I have been testing ADX and seems not useful at all. {image}
I only see one arrow on your chart that is a breakout of a range, and if you'd applied an adequate stop, would actually be in profit at the time of the screen capture :-)

In essence, the first swing (yellow arrow) sets up the range.
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cedsobey Sep 21, 2015 2:47pm | Post# 46

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Any form of trading that involves waiting for confirmation is essentially break out trading. Setting pending orders at certain levels of support/resistance is the only form that I know of that doesn't involve breakouts. Its definitely possible to be successful trading breakouts I agree with Matt, but we need to know when, how and why.
Think about, even if you have a trend following method like in the image, you would most likely be waiting for the up sloped channel to be broken before shorting the market. So you basically selling on the break of the small channel! Only exception once again being if you were to sell on faith.

So I would say the key to trading a breakout profitably is to trade the bigger picture using a breakout on the smaller timeframe/scale to confirm your entry.

And my 2 cents worth, there is no indicator that can tell you what price is going to do so learn to read price not decipher indicators. Wish someone had told me that 10 months ago

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Sciurus Sep 21, 2015 3:17pm | Post# 47

So I would say the key to trading a breakout profitably is to trade the bigger picture using a breakout on the smaller timeframe/scale to confirm your entry. {image}

forexdave1 Sep 21, 2015 9:02pm | Post# 48

Could one say that trend was dependent upon time? Define trend time, then trend is objective.



{quote} "There is no trend" - This is a true statement. Trend is subjective. Two traders could disagree. "There is no breakout" - This is a false statement. Breakout is objective. Price either stays between two levels or it breaks out of one of the levels. Two traders would always agree. "only the reality of your decision" - IMHO, only the results of your decisions. Your entry and exit decisions.

TooSlow Sep 21, 2015 9:10pm | Post# 49

Could one say that trend was dependent upon time? Define trend time, then trend is objective. {quote}

Trend is relative to time frame not objective.

lkthomas Sep 21, 2015 10:21pm | Post# 50

{quote} I only see one arrow on your chart that is a breakout of a range, and if you'd applied an adequate stop, would actually be in profit at the time of the screen capture :-) In essence, the first swing (yellow arrow) sets up the range. {image}
the first swing (yellow arrow) sets up the range <- It only setup upper bound of the range but not lower bound, but I will observe a bit more, good catch for this as I didn't notice first swing up would create a range.

Atokys Sep 21, 2015 10:54pm | Post# 51

Could one say that trend was dependent upon time? Define trend time, then trend is objective. {quote}
'Trends' are formed by a comparison of a recent price to a past price. There is no 'trend' unless you choose to define one.

foxybunny Sep 21, 2015 11:10pm | Post# 52

Could one say that trend was dependent upon time? Define trend time, then trend is objective. {quote}
{quote} Trend is relative to time frame not objective.

Trend can be said is dependent upon time frame AND upon how each trader defined the trend.

Have seen pro-traders saying trend is up when I don't see any trend, and actually is only for a few pips in forex or a few cents in stocks, yet to them it is correct for them to define trend is up, and is a profitable trade for them as they put in large quantities to earn just a few pips.

The original chart at the start of the thread did not show a time frame.
It could be a M5 or D1 chart, and the trend would be defined differently by me depending on the time frame, and the amount of pips I think is in the move within that time frame.
If that was a D1 chart, there would be adequate tradeable opportunities inside just a one bar or two bars.

A breakout on a M5 would be treated differently to a breakout on a D1 chart.
Defining a breakout on M5 and D1 may be similar or same, but the amount of pips potential movement after breakout would be treated vastly different whether it is a breakout on a M5 or a D1.

That is why it is still important to define a time frame you are operating, and understand what time frame another trader is referencing when they said trend is up or trend is down.

Without knowing what the other trader is referencing to which time frame, it is useless to hear another trader saying their view of a trend is up, down or sideways.

Sciurus Sep 22, 2015 12:08am | Post# 53

{quote} the first swing (yellow arrow) sets up the range <- It only setup upper bound of the range but not lower bound, but I will observe a bit more, good catch for this as I didn't notice first swing up would create a range.
Incorrect. All price action occurs between the low of the yellow arrow and the high of the yellow arrow until the high is finally broken. Any break of the lows inside the yellow arrow would immediately be confronted by the low of the yellow arrow. Either you plan to exit there, or you wait for a break and then plan your entry.

Sciurus Sep 22, 2015 12:18am | Post# 54

{quote} "There is no trend" - This is a true statement. Trend is subjective. Two traders could disagree. "There is no breakout" - This is a false statement. Breakout is objective. Price either stays between two levels or it breaks out of one of the levels. Two traders would always agree. "only the reality of your decision" - IMHO, only the results of your decisions. Your entry and exit decisions.
I think two traders could disagree on whether price was ranging or not too, based upon the time frame they were looking at. A range on a 5 minute chart isn't even visible on a daily chart. Ranges can also have different widths with trends spanning the top and the bottom....All trade-able, in my opinion.

Gwan Sep 22, 2015 1:04am | Post# 55

breakout that is still in swing range on higher time frame is safer to trade,
or, we trade swing on higher time frame, but breakout in lower timeframe, 2 signal 1 decission.

this also means that trade swing, as the failed breakout are moved to higher time frame as swing trading.

Matts Micro Sep 22, 2015 2:15am | Post# 56

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Just to show it's not all pretty, I got faked today. With H&S AJ broke structure/hrly 200ma TL on the downside. Pre-Franky forced it back up but I wasn't worried at this stage as this is norm. However at this point EA broke major 4hr support and this sent my trade down the tube. I have traded the EA BO however and I will be looking to pick up the loss.
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lkthomas Sep 22, 2015 3:21am | Post# 57

Just to show it's not all pretty, I got faked today. With H&S AJ broke structure/hrly 200ma TL on the downside. Pre-Franky forced it back up but I wasn't worried at this stage as this is norm. However at this point EA broke major 4hr support and this sent my trade down the tube. I have traded the EA BO however and I will be looking to pick up the loss. {image}

which BO EA are you using?! Also, couple bars back you see one swing up, one swing down, that indicates price will move both direction with uncertainty situation.

Matts Micro Sep 22, 2015 3:31am | Post# 58

{quote} which BO EA are you using?! Also, couple bars back you see one swing up, one swing down, that indicates price will move both direction with uncertainty situation.
The st swings are with LL's and LH's. I am also looking at larger TF where the current swing is on the downside.

EA= euraud

I have exited EA with only at my 50% profit level (1:1 trade) due to the 4hr 200ma being hit right on the 1.5600 level. Am looking at perhaps re-entering AJ.

Matts Micro Sep 22, 2015 5:13am | Post# 59

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{quote} The st swings are with LL's and LH's. I am also looking at larger TF where the current swing is on the downside. EA= euraud I have exited EA with only at my 50% profit level (1:1 trade) due to the 4hr 200ma being hit right on the 1.5600 level. Am looking at perhaps re-entering AJ.
It was the move I was looking for originally but they took it up on a stop hunt first (victim). I was only aiming for a 1:1 trade as it was all my MM system was looking for, for this trade but 2:1 is just now being easily accomplished (always a bummer when you see missed profits but in bank is also good).
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hytten Sep 22, 2015 10:32am | Post# 60

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{quote} Sorry I don't get it. So the trend is coming down, there were two false breakout before, and how do you enter the market again like that? What time frame are you using?
How come I get a feeling you do not know what a breakout is? Price cannot breakout if there is no congestion to break out from. In order to trade a break out you gotta find a congestion. Most people get killed in a breakout situation because of false break. A safer way to trade breakout is the retest of the breakout. Which is what I did.
Something similar on AUDUSD daily chart.

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