Breakout Strategy - The Pro's Way

[quote=forex77] Check your PM's sent you two today

Hey Keewi,

Where have you been?

You guys both talk about pivot points.... Can you explain to me exactly how you are using them and how you calculate them.... I have read a few articles on them but it seems there are quite a few variations... Can you let me know which ones you use and how helpful they are?

Forex77 I would defnitely love to learn some things from you, since what I was given was some parameters and a brief set of rules... You seem to know the whole package and are using it effectively. This is what I have been looking for... away to do this consistently and profitably.

I'd be interested to hear from any of you guys... Thanks

By the way you might know it as a different name... the Secret Forex Society website... Its run by the same guy Felix......

Hi People... I thought I'd re-open this thread as over the past few weeks... barring this week, breakout trading has been quite difficult for me.

I just wanted to know how you guys have done... Has anybody else found it hard trading breakouts this month?

Generally are January/February hard months to trade....

Hi Marcado, hope your February brings in the pips! I've been trading my usual box-play break out into the L.O. and it has been profitable.

: ) Thom

Micardo.

I too have found it difficult since the new year begain. I only trade break outs on GBP/USD and it was working great so I expect things to pick up now.

Happy Trading.
Liam.

Try to look {link removed}

There's so many ways out there to make PIPs on breakout, just try to find something simple instead of overcomplicating it. I tend to stay away from systems that's overcomplicated just to make a few PIPs, its just not worth it. Keep it simple....

Hey guys,

I just posted this on another thread, but it definitely applies to this one as well so what the heck...

It is the 'Original Turtle' system. The history is explained in the rules as well as the full system itself. This is available online for 'free' but some sites require a donation so I figured I might as well share it for those who haven't seen it before.

From my understanding, pros mainly center on longer-term breakout trades. While I think you can definitely make more playing the shorter term ones (and letting compounding do it's work), I think short-term is also riskier than jumping into the start of a large trend.

Anyways, enjoy the read! It is quite informative - EA anybody??



D.

Micardo:

I have not read very deep into this thread, but something you said in the No.6 post gave me a chill. You said you used a 20-pip target and a 30-pip stop. I am not a mathematician, but I believe you would have to win an unrealistic number of your trades to offset the 1.5:1 risk-reward ratio's impact on your profit probability. According to a bank trader I heard not long ago, if a 20-pip move in your favor is about all you can conservatively expect to get out of your setup for the pair you are trading and at the time of day you will be trading it, then you cannot afford to risk a greater pip move against you. And if that would make your protective stop unrealistcally tight, then pass on that trade opportunity.

...\larry.bye

Hey Daemien
Nice to see you in this tread too. I like your ideas in tread of weekly scalping system.
Thanks for posting link to Original Turtles strategy.

Hey guys thanks for your input...

Regarding my risk reward maybe you can share your thoughts... I also saw that as unrealistic so what I do now is trade 2 lots and both with a 30 pip stop.

The first has a profit target of 20 pips and the second i trail the stop 15 pips behind once the first lot has been taken off the table. This basically also seems negatie but the second lot is now there to ride the big move which can occur whilst I have already locked in the profits....

What do you guys think of that?

great 20 tp is very realistic .... you try pivot break out system ...... ?

Hi folks.

I just want to report that my first long paper trade on Oanda using Micardo's 2nd strategy has been whipsawed and stopped out.

Details:
Entry: 19780
Stop: 1.9760
Profit1: 1.9794
Profit2: 1.9810
Profit3: 1.9860

I've re-entered another limit order with the same criteria...let's see how price action goes for the rest of the day.
Based on the past 2 months backtested results I'm hopeful of success with these 2 strategies.

mike

Hey....
I ve been reading this interestin thread and I found out we are using
the same system Micardo.

I enter my trade the same way and my first TP is the same also. Mybe thats the catch of a system to go for 20pips-when brakeout confirms it is higly probable.

I have been thinking of a corection of my entry point. Many S/R is broken and brakeout is confirmed market retests prior S/R and then goes the way of brakeot. I am thinking of waiting market to do that and then enter.My SL could be smaller and profits bigger.
Anoder thing... I take 75% of my position when 20pips reached and the rest is "to ride possible bigger wave...and close 25% position on 34EMA rollover.

I have recently started trading naked as well as some of the people posted in the first couple of pages in this thread.

I used to trade Raghee Horner's method, and had some success with it, but with that (and many other systems) I found that the indicators and MA's, etc. all only did one thing: Give me paralysis by analysis. I am even to the point that I am thinking of getting rid of pivot points.

I can't tell you how many times I have missed out on a move because all of the pretty little lines didn't line up perfectly. All the while thinking....too bad my system doesn't allow me to take this trade....it looks like it has some potential.

I personally have found waiting on a retest of former support (of a breakout) on a larger time frame works better. (4 hr or 1 hr chart breakout.) However, once I see this coming, I will switch to a lower time frame because it doesn't always get all the way there. So, that way I am not missing some trade because it didn't go to the exact pip I was looking for. You can see it reverse back in your intended direction on say...the 5 or 15 min. chart. Also, sometimes you never get a chance to get in. So what? You only need one of these good ones a week to do well. (I only had two trades this week, and in two pairs I never trade.....USD/CAD and NZD/USD, after the spread, I was up a total of 189 pips.)

As far as exiting, I look for next resistance area, and take some profit. Normally it's half. This assumes that the area is far enough to warrant it. (i.e., if it's only 5 pips....I wouldn't be in it.....20 is a nice starting point, while still focusing on that 15 min. chart.) The rest I move to b/e and trail stop.

The most important part of my strategy is a trailing stop....the reason being is that I can get away from the computer and enjoy my life. (This IS the reason we are doing this, right?) Also, it keeps me from screwing the trade up and getting out at the slightest pullback. If I am up 20 pips, and then the other half is break even, I can live with that. Most traders don't even end up with those 20 at the end of the week.

Let's pretend the target is 100 pips. So what? I don't aim for that with a t/p order, mainly because it CAN go beyond that. And besides, lets say with my second lot I only get like 81 pips because of my trailing stop being hit. (Even though it hit the target before bouncing back to my t/s.) I don't cry about it. My time is worth more than 19 pips, and yours is too.

I am starting to realize that unless you are only observing and just starting to watch price movement in the beginning of your trading career, (and are glued to the monitor all day) you are more than likely facing an obsession or addiction. (Besides, this leads to "trying out" other indicators, and confusing you even more.) Once your trade is in motion, and you can safely take that first bit off the table, it's time to leave the screen. I personally will only be in one trade at a time 99% of the time, because then your whole day is going to be tied up. Trading IS NOT exciting. At least it shouldn't be. (Closing a winning trade is always going to be exciting though, I have to admit that.) Again, we are doing this for freedom, I read somewhere you should "Trade to live, NOT LIVE TO TRADE."

As soon as I started to realize that I don't have to get every single tick of a move, I started to do better. Under that example, I would be up 20 pips on one lot, and 81 on the other. That's 101 pips. To be up 101 pips is a good thing. Try compounding just 20 pips a week....that would be huge to your equity, and make you in the top 5% of retail traders. Remember, most traders LOSE in this market.

After just a short time, say a few years....you are living quite well because your lot size gets bigger. 20 pips at $100/pip is nothing to sneeze at. Not to mention those lots that will sometimes pick up another 50 or 100, just one of those trades every two weeks, and you are doing well.

I think that the longer I do this, the more I understand that you don't have to take 10,000 trades a week. I used to have an 85% hit rate on scalping, and still lost money. That is what your second lot running on its own is all about......giving you room for those losses.

And I read somewhere about learning only one pair well. I have to respectfully disagree only because of this:

You can trade GBP/USD and EUR/USD fairly well because at that point you only need to know THREE countries.

You can trade USD/JPY, EUR/USD, and EUR/JPY well because you only need to know THREE countries.

I will however concede that these pairs have some nuances to each one, but as far a fundamentals go, it is true.

But then again, I am a technical trader first and foremost, so if the spread isn't outrageous, I am willing to play anything if I see a breakout. (And can spot resistance levels, etc.)

A perfect example was a few months ago: NZD/USD was getting whacked. EUR/USD was going up, and pretty quick. I was late for both those moves. My solution: Buy EUR/NZD. 8 pip spread is kinda high, but it worked for something like 49 pips. They call that a synthetic cross, (but in reverse) and it does work....another recent thing I have gotten into.

Just my 2 pips, and great thread kids!

Hey guys and girls,

I thought about this a lot last night, and to be honest, I have never really back tested the breakout method. So, I was thinking of doing some research on this. I mean, up until now, I just did it, never really thought about it.

So what I am thinking is this: Maybe a few of us could scan for the last couple of years for triangles and rectangles in a particular few major pairs. Also, some data would have to be included.

I was thinking that maybe we could note triangles/rectangles in a couple of time frames in a pair. (Perhaps daily, 4hr, 1hr, 30 min, and 15 min.) I would also include weekly, but I am assuming none of us here are willing to risk that much heartburn and terror. lol

I would collect info like the time of day, the amount of pips gained, whether or not it pulled back to the triangle before taking off, and the success rate. That way, your results could be posted as such: (AND REMEMBER THIS ISN'T DATA COLLECTED, JUST A "DUMMY EXAMPLE")


NZD/USD:

Time Frame Success Rate: % of time pulled back: Av. Pips
4 hr triangle: 78% 39% 109
1 hr triangle: 68% 54% 78
15 min. tri: 61% 88% 31
4 hr rectangle: 65% 88% 50


and on and on.....also, along with pips, maybe we could track something like the average return in relation to the width of the highest point of triangle and lowest. (i.e. 230%, or whatever)

Anyone interested in this? And if so, I am willing to post my results on a specific pair. (doesn't matter to me, as I am just as happy to make money in Kiwis as I am Francs or Dollars.)

I figure if we can get 5 or 6 pairs tracked, we could be onto something. I know that triangles DO WORK, but I am sure some are more likely than others...Who knows, we may all decided that EUR/CHF is the way to go.

As a side note, please leave info about indicators out of it at first, if we feel a filter is needed, then we can talk about it. But I am more or less just interested in price and profit. MACD or whatever, can do whatever it wants.

A good book for Opening Range Breakout

http://www.marketgauge.com/TradingThe10OclockBulls.pdf

All the best...

Thanks for the info, Siewhf.

Lenoxer

Hey guys I was reading all the post and I wanted to add my input if it is okay. I have been trading full time for nearly 5 years and I have learned a lot each year. The forex market is something you will always learn new things no matter how long you have been trading.

Their are key points to be a successful trader.
1. Be patient
2. Have a strategy and stick with the rules to that system
3. Be patient
4. Money Management
5. Be patient
6. Learn how to lose

The last one really puzzles a lot of people when I tell them they need to learn how to lose as one of the key components to be a successful trader. What I mean by learning how to lose is a lot of traders will do several different things when price isn't going the way they want. I hear of a lot of traders will not put a protective Stop Loss in hoping price will reverse back into their direction. Let me tell you that if you are entering a trade and hoping it will go your way then stop right now and don't trade another dime of your money because you will fail. You have to learn to keep emotions out of trading. Also, I have seen a lot of traders that will double and even triple their next trade after a losing trade to make up for the loss. Well by doing this violates some of the keys to being a successful trader mentioned above. It violates the money management, patience, and the system.

I have read through some of the post on here and I have seen a lot of people saying they are taking profit at 20 pips and risking 30 on a trade. Please stop right now and don't waste anymore of you money. I'll explain why. The very best traders in the world are only 50 to 60% right so why do you think you will be better than the professionals? So if you are trading at less than 1:1 ratio then you will need to win at a minimum of 60 to 70% just to break even or make a small profit.

You need to have a system that has a 2:1 RR. I have a few strategies I trade with (about 8 to be exact) an every one of them have at least a 2:1 RR. Some even have a 4:1. But at the very worst I can lose 70% of the time and still make money. I have a very good breakout strategy that I have used for a long time and it average around a 50% win ratio. But my RR is 2:1 so I still make a lot of pips each month off this strategy alone. Plus, when a trade doesn't go my way then I know that the winning trade is just around the corner and I will make it up without violating my rules of trading for that strategy.

So get a strategy that has good risk vs reward and stick with the rules to that system and you'll do fine. Everyone tries to complicate trading when it is really simple to do. Also, the best trading strategies are the most simple ones to use. You don't need 10 different indicators to tell you when to enter a trade and you don't need to buy systems and pay a lot of money for them. If you want a good system to use then let me know and I will give you all of mine for free. I will even mentor traders for free if someone is really willing to learn.