Breakout Strategy - The Pro's Way | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Money management in trading - the stupid way and the right way 22 replies

Hard Way, Easy Way 115 replies

Simple Way is the most advance way... 11 replies

2 Way VS 1 Way Analysis 9 replies

Alpari Direct Pro vs Alpari MT4 Pro 4 replies

Attachments: Breakout Strategy - The Pro's Way
Exit Attachments

Breakout Strategy - The Pro's Way

  • #41
  • Oct 24, 2006 2:01am Oct 24, 2006 2:01am
Quoting twoblink
http://www.rueskitchen.com/images/uploads/ya.jpg
Yo twoblinky, vaht does dis do?

Uhmm, it sucks in air.

It certainly is sucking.

Yo twoblinky, if zee want me to unpimp dis dang', let me hear ya say vaght?
Mr. Trend
  • #42
  • Oct 24, 2006 2:37am Oct 24, 2006 2:37am
The Gbb/usd looks to be breaking out. It has move about 60 pips south since the opening of the new day 5pm eastern. It did retrace 22 pips after the first big move. Would like to see it keep moving.
  • #43
  • Oct 24, 2006 3:11am Oct 24, 2006 3:11am
Quoting Micardo
Hi Guys,

I thought it be a good idea that I start this thread since I currently trade breakouts of a 15 minute chart and am having some success.

The point is that I understand that alot of people trade breakouts of channels etc but everyone has different entry and exit rules. I want to try to find the difference between the traders who trade breakouts that are unsuccsful vs the traders who are and have been consistently profitable using breakouts.

Basically I have been trading this way for 3 months now but only on a demo account. I want to go live but just want some reassurance that this actually works in the real world. I know Psychology has alot to do with it, but generally speaking is this a profitable way to trade.

Please people share your thoughts on this in a bid to make everyone here profitable consistent traders.
Hi!

I personally believe that cable is not for novices for different reasons; first is psychology - cable can rapidly move backwards 20 pips in 20 seconds and then be back again. I saw last week - rallies 30 pips back in a 10 minutes, than again next after an hour - qiuck long shot.
Also it can move 60 pips back and in two hours be back.

So position witk SL less than 60 pips i consider endangered.

For starters I believe that yen and euro/usd are far better, less stress better predictability, smaller SL.

Hope that helps

Quidquid latine dictum sit altum viditur
  • #44
  • Oct 24, 2006 3:15am Oct 24, 2006 3:15am
I agree. Thanks for the input.
  • #45
  • Oct 24, 2006 7:13am Oct 24, 2006 7:13am
Thanks for the input guys.... So you are saying that the cable market is much more prone to whipsaws and fake breakouts???


Liz - You mention line-on-close trendlines.... Sorry to sound like a moron but what do you mean?
  • #46
  • Oct 24, 2006 7:36am Oct 24, 2006 7:36am
Quoting LizardGizzard
Breakout trading is the best possilbe method for so many reasons. Firstly, you need to rid yourself of all indicators. They are useless BS. All you need to do is trade breakouts of S/R based on the time of day you are trading. That's what I've been doing for quite sometime now. The best place to trade is AFTER the news has been digested. NEVER anticipate. You'll get killed. Trade the breakout and get out when divergence or an alternate breakout tells you to. Best thing to use is line-on-close trendlines. After 10 years of trading and relentless study, I've learned that nothing in TA works better than line-on-cloes trendline breakouts. When proper MA is applied, you simply can't do any better. All the fancy indicators in the world are no match for a prudent trader and her brains. Trading is so much easier than we want i to be. We ASSUME that we need complexity. Yet its exactly the opposite.

-Liz
Ok there is a bit of sarcasm, some nastiness in this thread already from a quite legitimate question really. I hope that the above isn't lost in all that ... some excellent tips.

One thing Liz, you mention stripping all indicators, but then suggest divergence as an exit stategy, is this how you exit .. or just a suggestion for those that can't get rid of indicators all together?
You can quit and they won't care, but you will always know.
  • #47
  • Oct 24, 2006 7:56am Oct 24, 2006 7:56am
I do to trade breakouts, but with a somewhat different but successful strategy. When I see that the market is due for a breakout, this can be break of resistance/support, trendlines, pivots, etc, I put on a trade in the likely direction. Let us say I put on a 1 mini lot trade, take profit 40pips and (mental) stop loss 20pips. If the price hits my stop loss, I do not stop out but rather open a position in the opposite direction, this times 2 mini lots with the same take profit and (again mental) stop loss). If the price hits my stop loss the second time, I do not stop out but rather open a position in the opposite direction, this times 3 mini lots with the same take profit and (again mental) stop loss). I keep doing this until I hit my take profit, then close out all my trades, that means some with losses and some with profit. Sum of all this, is a profit of 40 pips x 1 mini lot, minus the spread. The spread mean I will have to increase with a bit more then 1 mini lot every time, or accept less then 40 pips profit at the end. As I am "hedged" the whole way, a margin call is not very likely, as I can keep going on for a long time depending on the size of my equity. The problem here is that it take time to follow this, and keep putting the trades on as it keep ranging before the breakout, but a EA would solve that problem. Appreciate your comments,
Kjellik74
  • #48
  • Oct 24, 2006 8:19am Oct 24, 2006 8:19am
That sounds really interesting.... Im not sure if I understand it though... Are you talking about basically doubling up on each side until you hit your profit target so theoretically speaking you will profit ever day by say you 40 pips.

So you only close all your position once your profit is hit?

Example

Buy 1 at 20
Sell 2 at 0
Buy 3 at 20
Sell 4 at 0
Buy 5 at 20

Close all once it hits 60
6 sells at say 60
9 Buys at at say 40

Seems you break even?

Am I missing something? Or is this for the purpose of breaking even on those days when the market doesn't trend. What happens if your target is not hit?
  • #49
  • Oct 24, 2006 8:51am Oct 24, 2006 8:51am
OK people my update for today. Entered Early this morning on a short breakout.... got whipsawed hurrendously and am now looking for a re-entry although to be honest I don't see it happening this late in the day. Down 30 pips.

Anybody any ideas how I could of avoided this. I mean the market retraced came back down tested the low and started to retrace again.... Maybe I should of taken the hint and cut my losses when it started the 2nd retracement?
  • #50
  • Oct 24, 2006 8:53am Oct 24, 2006 8:53am
Hi, Akuma,

I like to look at at divergence as a precursor to a break in the opposite direction in order to exit, perhaps on a shorter time frame than the one I based my entry on. Often, its also a handy tool for me in entries as well...but ONLY if accompanied by a line-on-close trendline break. But I would probably do just as well without it. A break is a break, afterall, divergence or no. Candle patterns are useful to me in exiting as well (tweezer tops, hammers, etc.). I suppose my beef with indicators is in the conventional sense. Divergence is probably the most useful way of using them IMO. Price is so easy to trade ON ITS OWN, I just don't see why people need to look at the SHADOW of price (indicators) in order to trade. (Well, I guess I do know why actually...its the whole Holy Grail thing. Of course, the real Holy Grail is the trader's ability to interpret the markets based on the current situation and act quickly without fear.)

-Liz
There's always money in the banana stand.
  • #51
  • Oct 24, 2006 9:17am Oct 24, 2006 9:17am
Hi Liz,

Thanks for the reply, and I agree totally on the traditional use of indicators, so many use them for "confirmation" but don't actually know which one is confirming what ... and why do you need confirmation of what price is already showing anyway? ... but that is something for another day. A question I meant to ask above was do you look for a break to be a close below the line on close trend lines, or just a high or low .. I suspect a close, but would be interested to know for sure.

Cheers
Akuma
You can quit and they won't care, but you will always know.
  • #52
  • Oct 24, 2006 10:25am Oct 24, 2006 10:25am
Akuma,

I look for a close above or below the line on close trendline. A more conservative trader might look for a close above or below the last point which the trendline touched. I find that trendlines based on line charts seem to filter the noise a bit. Its hard to go wrong staying on the right side of the trendline. Just caught a bunch of breaks on GBP, EUR, CHF, and JPY with 5M line chart trend-breaks! Look ma, no indicators!

Liz
There's always money in the banana stand.
  • #53
  • Oct 24, 2006 10:35am Oct 24, 2006 10:35am
Quoting kjellik74
...The problem here is that it take time to follow this, and keep putting the trades on as it keep ranging before the breakout, but a EA would solve that problem. Appreciate your comments,
Welcome to the Factory kjellik74.

Just a ramble. . .

This reply is a comment from personal experience forward testing a variety of EAs as i believe the concept of including an EA in one's tool chest can be of benefit if managed properly. There are a couple of EAs that trade in similar ways to what you describe and include hedges. What i can say is that at least in my testing it is not a way to preserve one's capitol !! After a month or two there was so much in float and open trades that the EA would no longer open any new ones. Sure the number of "open trades" could be upped, but then you would just have more float out there and a margin call would be on the horizon. I know there are those who are successful at hedging as a day-to-day practice, and i'm not affraid of pulling the trigger on a hedge if it makes sence (say in the case of a strong trend, but i wish to attempt grabbing some pips on a retrace before it continues in the direction of trend/original entry).

Good trading, and have a good stay at the Factory.
Thom
  • #54
  • Oct 24, 2006 10:36am Oct 24, 2006 10:36am
Thanks Liz, we trade different approaches at least in principal, but it seems we both agree that we really don't need to make trading so complicated, I mean look at the swissie and euro this hour ... easily traded with two trend lines ... actually one if you like .. here is the swissie for example:

http://img238.imageshack.us/img238/4509/usdchfsi6.gif

You can quit and they won't care, but you will always know.
  • #55
  • Oct 24, 2006 10:41am Oct 24, 2006 10:41am
Quoting LizardGizzard
Breakout trading is the best possilbe method for so many reasons. . . After 10 years of trading and relentless study, I've learned that nothing in TA works better than line-on-cloes trendline breakouts. When proper MA is applied, you simply can't do any better. . .-Liz
Hi Liz, and thank you for your insightful post. I am trying to understand what your acronym "MA" might mean in context here. MA to me usually means Moving Average, though it seems that "MM" or Money Management might be more appropriate in context?

Thanks once again.
: ) Thom

PS. thanks for your reply to Akuma's Q. it helps clarify. I have an additional Q on the trend line. So are you looking not only for a close (in an uptrend) above your TL, then an additional candle close above? THX. Seems we are posting at the same general time.
  • #56
  • Oct 24, 2006 11:21am Oct 24, 2006 11:21am
Quoting kjellik74
I do to trade breakouts, but with a somewhat different but successful strategy. When I see that the market is due for a breakout, this can be break of resistance/support, trendlines, pivots, etc, I put on a trade in the likely direction. Let us say I put on a 1 mini lot trade, take profit 40pips and (mental) stop loss 20pips. If the price hits my stop loss, I do not stop out but rather open a position in the opposite direction, this times 2 mini lots with the same take profit and (again mental) stop loss). If the price hits my stop loss the second time, I do not stop out but rather open a position in the opposite direction, this times 3 mini lots with the same take profit and (again mental) stop loss). I keep doing this until I hit my take profit, then close out all my trades, that means some with losses and some with profit. Sum of all this, is a profit of 40 pips x 1 mini lot, minus the spread. The spread mean I will have to increase with a bit more then 1 mini lot every time, or accept less then 40 pips profit at the end. As I am "hedged" the whole way, a margin call is not very likely, as I can keep going on for a long time depending on the size of my equity. The problem here is that it take time to follow this, and keep putting the trades on as it keep ranging before the breakout, but a EA would solve that problem. Appreciate your comments,
How long have you been doing this? What is the largest amount of positions you had open at any single point?

I think this is a good strategy, but I'm not sure about your assumption about not having to worry about margin call. Brokers usually only use one side in the hedge position for margin, but I'm not sure what happens if you keep on adding positions. Any one have an idea?
  • #57
  • Oct 24, 2006 11:21am Oct 24, 2006 11:21am
Accrete, I meant MM. Sorry bout that one!

Akuma, love the chart. That sums it up! Simple simple simple. Took me many years to come to that realization. Its almost like a life-cycle. I started out trading using just price patterns and price action, then went through many years trying tomake every possible permutation of indicator tell me how to trade, and now I'm back to where I started, but with a whoooole helluva lot more experience. Sometimes the most obvious solution is the one right before your eyes.

Liz
There's always money in the banana stand.
  • #58
  • Oct 24, 2006 11:37am Oct 24, 2006 11:37am
Hi Liz,

What you say is music to my ears.... I have been trading for a little while mainly based on Breakouts as mentioned. I do get days where I lose and feel like it is something wrong with my system but that is the mistake all novices make right.

I guess its just confidence in your system and dedication. Simple things are usually the things that work.... If it isn't broken then why do I always try to fix it... I mean everyone loses now and again right... I just need to make myself understand that!!!!


kjellik74... I like what your system does in theory the only thing is I can't formulate it in my head in practise. Could you please put it in stupid form for me. i.e

Buy =
Sell =
Buy =
Sell =
Buy =
Sell =
Buy =

Profit target reached so X Lots short and X lots Long which = X Profit

Also what happens if you come to the end of the day and neither profit target has been hit.... or do you just keep going?

Again how long have you been doing this and what is the most amount of open lots youve had open so far?
  • #59
  • Oct 24, 2006 11:43am Oct 24, 2006 11:43am
True, Micardo. Just make more when you win. OR win more times than you lose. Very simple math.
There's always money in the banana stand.
  • #60
  • Oct 24, 2006 12:44pm Oct 24, 2006 12:44pm
Quoting kjellik74
When I see that the market is due for a breakout, this can be break of resistance/support, trendlines, pivots, etc, I put on a trade in the likely direction. Let us say I put on a 1 mini lot trade, take profit 40pips and (mental) stop loss 20pips. If the price hits my stop loss, I do not stop out but rather open a position in the opposite direction, this times 2 mini lots with the same take profit and (again mental) stop loss).
kjellik74,

I've thought about this some more, and I think that either I don't understand exactly what you are doing, or that perhaps there is some flow in your description.

The problem occurs right on the second order you open:
1) Buy 1 LOT TP 40 SL 20 (mental)
2) Sell 2 LOTS TP 40 SL 20 (mental)
Let's assume that the sale side takes profit. We close the buy at that time. Our results would be:
2x40 pips from sale - 1x60 pips from buy = 80 pips - 60 pips = 20 pips

Obviously 20 doesn't equal 40.

If you go onto the next iterations, you do get 40 pips on the third iteration, but then you get 0 pips on the fourth and fifth.

What's do you think?
0 traders viewing now