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is it possible to predict breakouts?

  • Post #1
  • Quote
  • First Post: Aug 21, 2011 9:30am Aug 21, 2011 9:30am
we can predict significant support & resistance levels.
but we can't predict breakouts?
for example 'buying the dip' strategy implies that support will not be broken.
how do they know that the support level will not be broken?
is there any method to calculate the probability of breakouts?
Quoting r4bb1t
we can predict significant support & resistance levels.
but we can't predict breakouts?
for example 'buying the dip' strategy implies that support will not be broken.
how do they know that the support level will not be broken?
is there any method to calculate the probability of breakouts?
maybe find out how many breakouts occured over the last 5 years compared to how many times resistance/support held.

mtfvhands time hey
Yes, there is a methodology to calculate the probability of breakouts and sustainable breakouts.

You cannot do it every single time.

And you cannot get an accurate percentage. If more of falls into a range.

And that percentage probability can constantly change.

What is the methodology?

Instead of focusing on things like MACD + Stochastics + Fib Level + Chart Pattern + Price Pattern.

You go to something like this:

Some combination of Order Flow + Information Flow + News + Sentiment + Sensitivity + Global Macro

Using those tools/methodologites/ways of viewing the market and doing them correctly, while slaying your inner demons and misconceptions, will get you far closer to what the true probabilities are of a breakout and sustained breakout occurring.
Private message me for a link to my order flow website.
I do not know how to predict price and wouldn't really want to give it a try. I am a trader that reacts to price and feel much more comfortable doing so.

The difference between predicting and reacting is, predicting you are assuming you know something about the markets which in turn makes you wrong when it doesn't go your way, which is tough psychologically.

Now reacting is something completely different, if you are reacting to price you are simply entering or exiting according to pre-determined criteria. Now you are not saying that you know price is going to do anything, you are simply saying that price has done x so I am going to do y, and I know that over a long enough period of time , by doing y I will be profitable, but it doesn't mean this trade will be profitable.

Do you see what I mean?

So in answering your question, maybe it is possible... but you don't really need to and in fact it would be better if you simply reacted to the price and accepted that no one on the planet has an accurate crystal ball :-)
I think you're a visual person. May be below picture (inside of that post) can describe lilttle thing about determining breakout or not. Sure it's not always clear like that, but that basic concept can help me a lot. It's not a matter of chart shape, but it's laying on the background.

http://www.forexfactory.com/showthre...36#post4798236
Quoting AFX-UK
I do not know how to predict price and wouldn't really want to give it a try. I am a trader that reacts to price and feel much more comfortable doing so.

The difference between predicting and reacting is, predicting you are assuming you know something about the markets which in turn makes you wrong when it doesn't go your way, which is tough psychologically.

Now reacting is something completely different, if you are reacting to price you are simply entering or exiting according to pre-determined criteria. Now you are not saying that you know price...

You are always predicting. There is no difference. If it makes you feel more at ease psychologically, no worries.

Just think about it.
Quoting Assassin
I think you're a visual person. May be below picture (inside of that post) can describe lilttle thing about determining breakout or not. Sure it's not always clear like that, but that basic concept can help me a lot. It's not a matter of chart shape, but it's laying on the background.

http://www.forexfactory.com/showthre...36#post4798236

personally i declare breakouts as High & Close prices are higher than resistance.
and breakdown as Low & Close prices are lower than support level.
as you see in the picture below.
Attached Image (click to enlarge)
Click to Enlarge Name: s&r.png Size: 23 KB
Quoting grkfx
Yes, there is a methodology to calculate the probability of breakouts and sustainable breakouts.

You cannot do it every single time.

And you cannot get an accurate percentage. If more of falls into a range.

And that percentage probability can constantly change.

What is the methodology?

Instead of focusing on things like MACD + Stochastics + Fib Level + Chart Pattern + Price Pattern.

You go to something like this:

Some combination of Order Flow + Information Flow + News + Sentiment + Sensitivity + Global Macro

Using those tools/methodologites/ways...
Thank you for this post grkfx
With this, I now feel that I can be a Breakout Trader.
In fact I liked it so much that I have written a little jingle
about it.

To the tune of Ronnie McDowell's "Watching Girls Go By'.

"I'm a breakout Trader
I'm a breakout Trader
Oh me oh my, watching trades go by

Oh me oh my, watching trades go by
Oh me oh my, watching trades go by

yeah ! I'm a breakout Trader
Quoting egadsforex
Thank you for this post grkfx
With this, I now feel that I can be a Breakout Trader.
In fact I liked it so much that I have written a little jingle
about it.

To the tune of Ronnie McDowell's "Watching Girls Go By'.

"I'm a breakout Trader
I'm a breakout Trader
Oh me oh my, watching trades go by

Oh me oh my, watching trades go by
Oh me oh my, watching trades go by

yeah ! I'm a breakout Trader
ROFL Hes way serious DUDE!!!
Quoting newyear498
ROFL Hes way serious DUDE!!!
Exactly !
Quoting egadsforex
Exactly !
LOL, that was a good post to put a smile on my face
Quoting orderphlow
You are always predicting. There is no difference. If it makes you feel more at ease psychologically, no worries.

Just think about it.
I am sorry but I stand by the fact that there is a a difference between the two. Predicting is making an assumption that you know something about the future.

Reacting is accepting that you are simply doing something because of something else.

So if price is approaching a support line, buying a bounce as it approaches is making a prediction that it will in fact bounce.

Where as waiting for a reversal pattern around that area is reacting to the market telling you something. Do you see what I mean? I don't want to cause an argument, but I do believe it is an important distinction to make.
  • Post #13
  • Quote
  • Edited 4:52pm Aug 22, 2011 4:31pm | Edited 4:52pm
I understand why you are where you are, in terms of what you are saying. I have been careful in the past not to mention the P word in conversation, for being looked at as some sort of kooky market psychic.

There are only two differences here. One you are saying that you prefer a reversal pattern before you react to a trade, whereas, to you, a predictor will take the trade to call a bottom or top, without confirmation.

So it's the difference between a stop order and a limit order, sort of. The thing is, that you are predicting either way. It's just that when you "react" you are using an edge, whether that be chart patterns, or TS, or PA, etc. Conversely, when you are "predicting" as you say, you are just calling tops and bottoms, without an edge.

In both cases, the trader is predicting the next move after the buy or sell button is pushed. It's just that one methodology is more thought out than the other. But still, prediction is at the heart of both.

With that said, I totally agree with your reactionary way of predicting the market.
It is difficult. But it would be possible to increase the probability.
I have studied it.
No, you can't predict breakouts. BTW, that's how most traders blow their accounts.
Yes, you can predict breakouts not with 100% accuracy but with a fairly high accuracy and if it moves against you, you just close the trade take a small lose and wait for the next one.
Learn, a forex trader must, unlearn and relearn he will.
  • Post #17
  • Quote
  • Edited 3:24pm Oct 25, 2015 8:28am | Edited 3:24pm
Quoting AFX-UK
Predicting is making an assumption that you know something about the future.

Yes and no.

Like so many of the subjects widely discussed (often with some disagreement) in trading forums, the conversations often conceal the fact that different people are using words with slightly different meanings, understandings and assumptions.

In this case, the word causing the disagreements is "predicting".

I can't tell whether any individual trade I make will be profitable, but I know with mathematical, statistical, probabilistic confidence that the next 200 trades I make will collectively be profitable.

The confusion is between individual and collective predicting.

On each individual occasion that one trades, one can't predict the future. But, given the familiarity and expertise with statistics and probability that every successful trader needs and has, one can confidently predict it collectively, in the long run, over the times ones chooses to trade (and of course that's precisely why one chooses those times to trade).

And that's what one needs to be able to do.
  • Post #18
  • Quote
  • Last Post: Oct 30, 2015 2:20pm Oct 30, 2015 2:20pm
Quoting gravitist
No, you can't predict breakouts. BTW, that's how most traders blow their accounts.
Yes you can and no, it doesn't blow the account.
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