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A Basic Breakout System

  • #121
  • Jul 13, 2008 6:22am Jul 13, 2008 6:22am
Of course not.

Systems are braces, similar to those provided to an individual who is temporarily handicapped. They are there to provide you with an approach towards a methodology moving from the outside in.

And through practice one is expected to assimilate the essence underlining the motivation behind these movements.

When that happens, you notice that you no longer need those braces, because you can now clearly see, what the purpose of the indicators was. You see, in true form, what it IS they were there to "point out", and you start viewing things, from the inside out, thinking out of the box.

Indicator based systems are an inaccurate oversimplification of that which is already simple. If you can see through that thick increasingly self fulfilling indicator reliant mentality. You'll notice that all systems are broken down into the same components.

I always advice on Naked trading, that is how i personally trade, but for those of you who are still taking the initial steps into price action analysis, a direct approach is far too overwhelming.

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #122
  • Jul 13, 2008 6:24am Jul 13, 2008 6:24am
Ok i just saw your picture now, it seems you had a specific question.

This is a Swing High/Low breakout system. Inbetweens are not traded.

If you have A band at the top and a band at the bottom breached once during P1, then at P3 the trade goes to whichever new H/L is taken out first.

No inbetweens though. that's a whole different thing.

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #123
  • Jul 13, 2008 6:53am Jul 13, 2008 6:53am
Quoting awsl
Isn't this breakout just a variation or exactly the same as The Bat strategy from Team Aphid. The indicator is from them as well!
The only thing this system has in common with the Bat strategy is the indicator.
The entrance is different. The exit is different.
  • #124
  • Jul 14, 2008 2:34am Jul 14, 2008 2:34am
Quoting effilang
No, i don't think so. The only reason there is an indicator in this system in the first place is because not everyone can read price, which is why HH/HL, LL/LH and price action basics are a prerequisite on the first page.

All you're looking for, is a change in price direction through successive new HHs and a HL in an up movement, followed by a break of the high, a retracement and another break past that zone.

You can't convince me that trading the break of a HH in an uptrend is "someone's system", and you can try all you want.
Long before indicators every existed, High and Low breakouts were being traded.

You can use Fractals as advised in my other thread to achieve the same results, but i guess if i used Fractals, it wouldn't be my system either
Plus this is a Breakout Scalper with an aim of 10-50 pips. Trades are retaken in the direction of the trend every time they occur, not just once on the breakout of the band.

Regards.
Lang.

I must agree the observation of HH/HL , LH/LL in relation to an entry does give the trade a good probability of success. The 3 phase structure is indeed well considered.
I'm just moving clouds today - tomorrow I'll try mountains.
  • #125
  • Jul 14, 2008 3:18am Jul 14, 2008 3:18am
Hi Effi,

Quote
All you're looking for, is a change in price direction through successive new HHs and a HL in an up movement, followed by a break of the high, a retracement and another break past that zone.
Thanks for sharing this approach. I have been practicing with mini backtests and would like to check with you or any of the more experienced FF contributors that I am interpreting my charts correctly. Please comment on my entries as indicated on the attached chart....the entry I'm mainly not sure about is B.......are the others as they should be?

I'd really appreciate an authoritative response....thankyou.
Attached Image (click to enlarge)
Click to Enlarge Name: GPBUSD_H4_EFFI.jpg Size: 158 KB
  • #126
  • Jul 14, 2008 3:26am Jul 14, 2008 3:26am
They look good Attic,

I don't see the need to correct anything.

You might even use that 1.9903 zone for a current Long entry as the spike before that is too extreme.
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #127
  • Jul 14, 2008 3:59am Jul 14, 2008 3:59am
Thankyou for your quick reply, Effi.

Learning day by day.

Attic
  • #128
  • Jul 14, 2008 4:21am Jul 14, 2008 4:21am
Hi all, please see attached chart for AUDJPY. Have I have interpreted the rules correctly for AUDJPY. Thanks.
Attached Image (click to enlarge)
Click to Enlarge Name: audjpy h4.gif Size: 10 KB
  • #129
  • Jul 14, 2008 4:35am Jul 14, 2008 4:35am
That is both a valid and an invalid entry.

Invalid because you entered 1-2 candles after P1; where you're supposed to wait for pullbacks or extended sideways movement.

Valid because although the highs on the 10th of July and the 11th didn't breach the Band, they were extremely close and both attempts at it's brake resulted in retreats, so in essence the 10th and 11th highs could have been substituted for P1, this is exceptional.

As sure as the sun rising, someone is gonna ask me, but it's not in check with the rules. The world, is not in check with the rules : ) - And we have to adapt to mutations.

It's imperative that you learn more about price action. Read Pring and Nison's books, they provide the fundamental knowledge acquired to approach these situations effectively.

Regards.
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #130
  • Jul 14, 2008 4:50am Jul 14, 2008 4:50am
Thanks for reply.

Quoting effilang
That is both a valid and an invalid entry.

Invalid because you entered 1-2 candles after P1; where you're supposed to wait for pullbacks or extended sideways movement.
Noted. Thanks.

Valid because although the highs on the 10th of July and the 11th didn't breach the Band, they were extremely close and both attempts at it's brake resulted in retreats, so in essence the 10th and 11th highs could have been substituted for P1, this is exceptional.
Actually the highs on 10th and 11th July did not influence my decision. I was applying the rules based solely on the break on 14th July. But obviously that is the wrong understanding of the rules

As sure as the sun rising, someone is gonna ask me, but it's not in check with the rules. The world, is not in check with the rules : ) - And we have to adapt to mutations.

It's imperative that you learn more about price action. Read Pring and Nison's books, they provide the fundamental knowledge acquired to approach these situations effectively.

Regards.
E. Lang
  • #131
  • Jul 14, 2008 1:17pm Jul 14, 2008 1:17pm
Quoting effilang
No, i don't think so. The only reason there is an indicator in this system in the first place is because not everyone can read price, which is why HH/HL, LL/LH and price action basics are a prerequisite on the first page.

All you're looking for, is a change in price direction through successive new HHs and a HL in an up movement, followed by a break of the high, a retracement and another break past that zone.
Just for my clarification, you don't even need the indicator then to trade this system. You're only using it to provide a visual cue for those less familiar with identifying new HH/HL patterns? If that's so then that creates more opportunities for new trades or to add to existing positions as there are often HH breakouts in between the bands the indicator draws. So a more "naked" strategy one could follow would be to (in an uptrend) put on a position with every HH breakout until your last position stops out. Then sit on the sidelines waiting for either a series of successive LLs or a resumption of HHs. Is that how you're personally trading Effi? I think you mentioned not using the indicator before.
  • #132
  • Jul 14, 2008 3:05pm Jul 14, 2008 3:05pm
Could anyone please explain how to calculate the pivot on the correction once it is confirmed. I would really appreciate any help.


Thanks
  • #133
  • Jul 14, 2008 4:12pm Jul 14, 2008 4:12pm
Quoting ocelot
Just for my clarification, you don't even need the indicator then to trade this system. You're only using it to provide a visual cue for those less familiar with identifying new HH/HL patterns? If that's so then that creates more opportunities for new trades or to add to existing positions as there are often HH breakouts in between the bands the indicator draws. So a more "naked" strategy one could follow would be to (in an uptrend) put on a position with every HH breakout until your last position stops out. Then sit on the sidelines waiting for either a series of successive LLs or a resumption of HHs. Is that how you're personally trading Effi? I think you mentioned not using the indicator before.
I traden naked and use priceaction to see the direction of my trades and I base the trades on overnight ranges. This morning I attached the indicator and saw that it gave me mostly the same entries. So I think it's good for those who are unusual to see the trend using HH, HL, LH and LL. Was a bit surprised to arrive at this conclusion because I don't like using indicators, but this indicator was not so bad.
  • #134
  • Jul 14, 2008 4:34pm Jul 14, 2008 4:34pm
I'm a bit confused here effi,

P1 is where the band breeches the candle correct?

Effi now I'm looking at your charts and some others and I'm trying to backtest it...

I'm trying to figure out when I go short and when i go long based on the pivot points...In some charts you go short in a situation where in a another chart it seems you go long.

Can you be more descriptive of "Once the price breaches the corrections' PP, the trade is executed"?

Thanks for the system

Also If I could be of any more help in clarifying my questions please let me know, I really want to understand this system completely.

Thanks again
  • #135
  • Jul 14, 2008 4:37pm Jul 14, 2008 4:37pm
Hi Maverick,

Could you show me a chart example?

You can just recall pictures from old posts that made an impression to you.

It's difficult to answer your question without some imagery.

Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #136
  • Edited 5:44pm Jul 14, 2008 5:29pm | Edited 5:44pm
sure lemme look em up real quick and I'll edit this post to attach them


edit: I guess what I wanted to know is...

1.) we go long when there is a red line under the candlesticks, aka when a green band has broke the candles.

we go short when there is a green line above candle sticks, aka when a red band has broke the candles

2.) we only go long or short at pivot points formed once the new band starts, so we have to wait for atleast one retractment in order to find a price to place our order

3.) And each time a new band breaks the candle, we start setting up new resistance/supports and enter based on those, not the previous band's supports and resistances. so we don't enter a new green candle with the previous green candles resistances...correct?

I'm sure once I get time to live trade this more instead of backtrade it I'll be more familiar with it
  • #137
  • Jul 14, 2008 6:59pm Jul 14, 2008 6:59pm
You've got this all back to front.

1.) we go long when there is a red line under the candlesticks, aka when a green band has broke the candles.

We look for long trades when the price breaches the green band, not when there is a red band under the price. (The red band can appear later)
we go short when there is a green line above candle sticks, aka when a red band has broke the candles

We look for short trades when the price breaches the red band.

2.) we only go long or short at pivot points formed once the new band starts, so we have to wait for atleast one retractment in order to find a price to place our order

We only go long or short after:

1. The band is breached
2. There is a correction (x) AFTER THAT or evident sideways movement
3. Long: the high of X is broken, Short: the low of x is broken

 3.) And each time a new band breaks the candle, we start setting up new resistance/supports and enter based on those, not the previous band's supports and resistances. so we don't enter a new green candle with the previous green candles resistances...correct?

The candle isn't broken, it's the price that breaches the line : )
To make it simple; if the red band is breached u take short trades only until the green band is breached.

If the green band is breached u take long trades only until the red band is breached.

I'm sure once I get time to live trade this more instead of backtrade it I'll be more familiar with it

Please read this, not just to you, to everyone, because all i'm doing here is literally retyping what is already on the first pages containing the tutorial. I haven't said ANYTHING new, whatsoever.

I don't see how my answer here can help you when it's not any different, but if it does, great. : )

Regards.
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #138
  • Jul 14, 2008 7:23pm Jul 14, 2008 7:23pm
2. There is a correction (x) AFTER THAT or evident sideways movement
3. Long: the high of X is broken, Short: the low of x is broken


^^ so I set limit orders at those (the high fo x when I go long, the low of x when I go short)

I don't wait for it to break again...correct?

Just trying to get all the details out of this.... going to try it tonight with the volitalile pairs, prolly nzd/jpy and aud/jpy
  • #139
  • Jul 15, 2008 1:12am Jul 15, 2008 1:12am
Hey there, Effi. Prolific as ever I see. Just thought I'd bring up early entries as I was surprised no one has commented on them, yet. Is the early entry technique something you implement regularly with success or was it something you were just trying? It definitely provides a more appealing R:R ratio.
  • #140
  • Edited 6:12am Jul 15, 2008 6:01am | Edited 6:12am
Quoting zeruff
Hey there, Effi. Prolific as ever I see. Just thought I'd bring up early entries as I was surprised no one has commented on them, yet. Is the early entry technique something you implement regularly with success or was it something you were just trying? It definitely provides a more appealing R:R ratio.
I've been looking at a couple of potential early entry strategies as well. First, I'm combining the MAs from Effi's Basic Trading System, and using the entry rules for that system after a breach has occurred. So, for long trades, after an upside breach look to go long above a candle that touches the bottom MA. Second, during the retrace from an upside breach, wait for the first candle to not make a lower low, set a limit order to buy above the high of that candle. You can look for inside bars in this scenario too. I think this is basically what Effi talked about in his original post regarding early entries and is the one I'm leaning more toward. The fewer indicators on my chart, the better.
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