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Breakout Strategy - The Pro's Way

  • #81
  • Oct 25, 2006 1:16am Oct 25, 2006 1:16am
A few basic rules when opening a trade while trading naked breakouts...

 

  1. Make sure the missus knows about naked men and cold weather.
  2. Do not trade the initial breakout, i.e don't chase the trade.
  3. Trade first re-test at or close to the breakout area if price is not telling you otherwise.
  4. Trade with a tight stop, which means concentrate on getting that entry right, and never never never never (did I say never) move that stop, if it's hit it means your trading idea was wrong, big woopie, just go to the next one.

.... oh and get to the chemist .. im sure there is a cream for that naked breakout on sale.

You can quit and they won't care, but you will always know.
  • #82
  • Oct 25, 2006 4:11am Oct 25, 2006 4:11am
Hi Akuma

Great posts! I just discovered your web site too! Congratulations!

Did you read/use NFF book/strategy?

Best Regards


Pepe
  • #83
  • Oct 25, 2006 4:45am Oct 25, 2006 4:45am
Quoting Akuma99
Anyhow personally, I use price action alone to see how it reacts around those levels, and I rarely trade a straight breakout, instead I trade the first pullback to the area of the breakout, it means you miss the odd one, but your probabilities are better as well with tighter stops as you don't have to worry about headfakes taking you out.
that's the key to playing this type of strat, especially on that 'whippy, spikey Cable'

just watch the Asian shift range & guage your H-L range markers.....quite a lot of the entries will follow thru adequately enough to at least book profits on part of your position.....& a good few shunt on for the 'move of the day' - particularly if the accompanying technicals (pivot/fibs) stack up to enhance the entry!

good post Akuma
  • #84
  • Oct 25, 2006 5:58am Oct 25, 2006 5:58am
Quoting privatefr
Hi Akuma

Great posts! I just discovered your web site too! Congratulations!

Did you read/use NFF book/strategy?

Best Regards


Pepe
Thanks Pepe, out of curiosity, which of the websites did you find? ... now by asking this question, I suspect my answer will be no, but what is the NFF strategy? ... here I was thinking I had read them all

Oh and some very sound advice there Buk, good stuff.
You can quit and they won't care, but you will always know.
  • #85
  • Oct 25, 2006 6:20pm Oct 25, 2006 6:20pm
Quoting Akuma99
A few basic rules when opening a trade while trading naked breakouts...

  1. Make sure the missus knows about naked men and cold weather...

  1. My solution is to trade in a heated leather chair.

---OK serious. Akuma great example. I have not traded off a simple line chart, don't know if i will...but the example is great (like them JapCandles, but do draw my TDHorz lines off the Open/Close). I traded today after the dust settled at it was good for 20 pips on 50% of my lots, then moved the balance to BE+2 and got stopped out later on...So it was good for 22 pips in all. I was happy with the entry/exits and it was a good trade.


: ) Thom

  • #86
  • Oct 25, 2006 9:54pm Oct 25, 2006 9:54pm
Sorry Just a quick response today..... Picked up a good trade this morning. A break to the upside and picked up 20 pips.

Not bad for a mornings work
  • #87
  • Oct 26, 2006 3:21am Oct 26, 2006 3:21am
bit of a patchy example of today's Asian shift b/o potential, as it's currently huffing & puffing at the b/o zone - but the bigger picture lends itself to a decent pitch towards Friday's high & beyond, providing the Cable Bulls can sustain this higher low lift on the hourly........

failure to hold 8825 would render it suspect on this break, but the action prior to the London Open tipped the wink to the possible continuation potential.....specially the smaller frame activity at the 88RN.......

as Akuma mentioned on a prev post - this type of smaller frame execution can assist with deploying tighter stops, whilst striking with the overall (larger frame) momentum......
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  • #88
  • Oct 26, 2006 3:57am Oct 26, 2006 3:57am
apologies....I had a 'blonde moment' in that 1st chart on the prev post......

the resistance up here at current levels is actually finding it tough at the R2 pivot, not the R1 as highlighted!........
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  • #89
  • Oct 26, 2006 4:33am Oct 26, 2006 4:33am
it's no secret Cable likes to channel.....the hourly top end is adding to this mornings bustle at this pivot resistance level.....and the lower lines (prev s&r activity) can be referenced as potential entry points on any near term exhaustion off these continuation steps, providing one views this current higher low move as a genuine attempt to push to prev highs?

I like to use this type of price action when deciding to take on these late Asian/early London breaks.......paying particular att'n to the activity on & around the key Big Numbers (00's & 50's)........
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  • #90
  • Oct 26, 2006 5:19am Oct 26, 2006 5:19am
Buk, Thank you for your contribution... I hope you will continue to post these analysis daily as it is a big help to us newbies .


For me today has been quite a simple trade that I exited a few hours ago...

The asian session started to trend upwards whch I wasn't happing about (I prefer a range bound assian session) thus not creating to many points for a support or resistance level, however there were just about enough to be able o read the break and I entered... Took 1 lot off the table a little while back, moved the 2nd lot to Break even and am waiting to see where this ride will take me
  • #91
  • Edited 5:27am Oct 26, 2006 5:26am | Edited 5:27am
replacement of
Quoting Micardo

For me today has been quite a simple trade that I exited a few hours ago...

Took 1 lot off the table a little while back, moved the 2nd lot to Break even and am waiting to see where this ride will take me
good for you, well done!

yeah, like I said - today isn't particularly the greatest of examples, but the action/reaction around the 8800 was no doubt sufficient to engage, going with the short term flow........

occasionally the price action will afford a pretty decent entry pre-London with adequate stop placement available in case it goes a.w.o.l
  • #92
  • Oct 26, 2006 7:36pm Oct 26, 2006 7:36pm
I have a question for you guys....

How do you usually decide where to place your stops.... I have a standard 30 pip placement but it seems you guys have different methods for doing this.
  • #93
  • Oct 26, 2006 10:14pm Oct 26, 2006 10:14pm
Quoting Micardo
I have a question for you guys....

How do you usually decide where to place your stops.... I have a standard 30 pip placement but it seems you guys have different methods for doing this.
I place my stop behind the next S/R level. preferably the next fib level. I don't use a specific pip amount but rarely go more than 30.
  • #94
  • Oct 27, 2006 1:20am Oct 27, 2006 1:20am
it's entirely price dependant Micardo......

wherever possible I look for a confluence of events to strengthen a potential entry.....by that I mean price being accompanied via a prev zone of horizontal s&r, maybe a Fib line from one of the larger timeframes and/or a pivot level perhaps?......also the type of pattern playing out at a given level in relation to the previous move.........

sometimes it will dictate a tighter than normal risk outlook (20-30pips)......other times, if I feel the level is worth a tentative prod, & price is offering a green light, the stop might require wider room to breath.......

it then means the position size/risk ratio might need to be re-adjusted initially, to allow the trade a little slack......that would equate to a larger protective stop (30-50pips maybe)........

I guess it comes down to the types of strat(s) & timeframe triggers you employ.......each decision requires slightly differing parameters........
  • #95
  • Oct 27, 2006 2:10am Oct 27, 2006 2:10am
Stop placement is always a tricky one, I will say one thing on the topic, do your best not to place your stops with everyone elses, we know brokers run stops if there is a bunch of them on their books nearby, and if it is not them, then the larger traders are always looking for liquidity to peel off some of their positions, and stop groupings are the perfect place to do it.

The most obvious place to put a stop is "just behind the most recent support/resistance", it's easy, it is taught in every book on the planet, and so is such an obvious magnet for those little spikey stop runs you see now and then (mind you it can mean they are protected as well, hence the pauses near support and resistance before they are pushed through).

If you can, and it takes some practice to do it, and to read sentiment correctly, identify those areas that are obvious areas for people to place stops, and see if you can enter as close as possible to those areas, that way, for example your 30 pip stop is hopefully beyond others, rather than right in the middle of everyone else. If your stop is taken out, then chances are you trade idea really was wrong, not just taken out in a stop spike.

Sometimes your stops getting taken out is not a problem with stop distance, but with entry placement.
You can quit and they won't care, but you will always know.
  • #96
  • Oct 27, 2006 2:20am Oct 27, 2006 2:20am
Quoting Akuma99
Sometimes your stops getting taken out is not a problem with stop distance, but with entry placement.
absolutely!

which is why you often witness fake outs around the "obvious" b/o levels........

it's easy money for the sharks - all they need do is run price back & forth around a Big Number or an area of prev consolidation prior to a potential b/o level......they know the vast majority of retailers haul tight stops behind their entries.....they're playing the 'scared money' game & the law of averages will keep them to the + side most of the time........
  • #97
  • Oct 27, 2006 9:17am Oct 27, 2006 9:17am
Ok what a very nice day today :-).

I had a quick 15 minute trade for a nice 20 pips to finish off the week.

There were a few fake short breakouts but luckily not everything lined up so I didn't enter. It was looking like it was going to be quite a uiet day, but then the GDP came out and Wham!!!! we get a break to the upside..... Waiting waiting waiting and then my rules fall into place so I'm in.... 15 minutes and Im back out. Nice end to the week.

Later I will take the time to post my last 3 weeks trading. Basically this is the period where I have been stringently sticking to my rules, keeping a journal etc.

Anybody else have success today?
  • #98
  • Oct 27, 2006 3:11pm Oct 27, 2006 3:11pm
Hello to all.

I have read through this thread with great interest, I have been trading breakouts and s/r with good success on the 4H charts. However I dont have a set of rules which I know is very important in this business.

I have been trying to wait for price to retest after the break and then jumping in but this does not happen all that often and i miss many great breakouts.

Would anyone be willing to share with me the rules you follow to trade breakouts?

Do you wait for the retrace to a fib level or all the way back to the trend line?

If i am trading breakouts on the 4H charts should i wait for a close on the 4H charts or can I drop down to the 1H to gt in sooner? again i try to wait for a retrace normally and just enter then.

If the price goes back the other side of the trend line would you reverse your position or walk away?

Micardo: I had a great day also taking 150 pips out of the usdjpy

any help would be great

many thanks

DD
  • #99
  • Oct 27, 2006 3:21pm Oct 27, 2006 3:21pm
Digitaldean,

That is impressive.... I don't know of how much help I can be to you since you seem to be taking more out of the market than me :-).

Also I only trade off of a 15 minute chart... I have one of the worst trates a trader can have.... Im impatient .

But basically I wait for a break of the support and resistance and a close above or below it. I then wait for the price action to carry on in the same direction... If i get all of these then I'm in. I don't know if this helps you or not, and I would love to hear more about your strategy as I guess trading longer term time frames is much less hectic and can bring in those larger runs....

How long you been trading this way? How many pips do you average a month and trades do you do?

Speak to you soon.

Micardo
  • #100
  • Oct 27, 2006 8:10pm Oct 27, 2006 8:10pm
Quoting Micardo
Digitaldean,

That is impressive.... I don't know of how much help I can be to you since you seem to be taking more out of the market than me :-).

Also I only trade off of a 15 minute chart... I have one of the worst trates a trader can have.... Im impatient .

But basically I wait for a break of the support and resistance and a close above or below it. I then wait for the price action to carry on in the same direction... If i get all of these then I'm in. I don't know if this helps you or not, and I would love to hear more about your strategy as I guess trading longer term time frames is much less hectic and can bring in those larger runs....

How long you been trading this way? How many pips do you average a month and trades do you do?

Speak to you soon.

Micardo
Hi Micardo,

Well I have not been trading breakouts for very long at all, I had a great week last week but this week just about broke even with the USDJPY trade.

But I can say since I started trading on the longer time frames like the daily charts and 4H charts I have been far more profitable.

I wish I could find out if anyone is trading breakouts on the lager time frames with consistant wins using breakouts.

how are you doing overall on the 15 min charts?

DD
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