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The Breaker Strategy - Trading Recent S/R

  • #21
  • Oct 4, 2010 11:43pm Oct 4, 2010 11:43pm
Quoting bandung
Hi Greg..

you do a good job..
Thank you for sharing.

A Trades example you posted is a good breakout trade.
Do you open a trade after a close of breakout bar? or you put a buy stop a few pip above or below a recent s/r ?
how you deal with false breakout?

on more do you trade a pullback to broken s/r maybe like in this attached chart?


thank you.
I will try to answer these issues, in conjunction with others, for you in my following posts. I really want to tie my presentation carefully!
  • #22
  • Oct 5, 2010 12:08am Oct 5, 2010 12:08am
To be good at managing breakouts (and false ones), especially with this strategy, you will need to learn how to mentally measure price velocities. Note all price breakers (breakouts and false breakers alike) are the same - some move relatively fast, some medium fast, some slowly, and so on, etc. In the past, I watched price for a good while just to get this skill down under my belt. And am still not heavenly perfect at it - I do it adequately.

To adequately do this then I submit to my little principle below, and here in also lies my complete methodology for entering trades and exiting disasters:

I) Entry Barriers - use for clearly identifying S/R I want to trade off!

II) Scaling of Risk Percentage - to fit with perceived price velocity
(the length of one price bar can give you a good idea of this, as well as the height in pips of S from R) - I never risk more than 4% of my account at any time; I risk sometimes 1%, 2%,3% and 4% depending on how I see the overall trade environment on chart of course!

III)Decision zone - Where I want to enter market and how I decide to stay - risk area and confirmation area - I try to enter market the best 3 - 5 pip break off recent S/R level ideally (this is sometimes relatively hard to accomplish!)

IV)My Fuck the market zone and my Fuck the market mentality - never let a winner become a loser - never! LOL!

(I will illustrate on charts!)
  • #23
  • Oct 5, 2010 12:28am Oct 5, 2010 12:28am
By the way: I exited that trade I took earlier on for a 99 pips! Am out observing how price will react to the major trend line going up - it seem to be responding alright so far. If am to enter again, the charts will "tell" me!
  • #24
  • Oct 5, 2010 7:47pm Oct 5, 2010 7:47pm
Quoting Greg2011
To be good at managing breakouts (and false ones), especially with this strategy, you will need to learn how to mentally measure price velocities. Note all price breakers (breakouts and false breakers alike) are the same - some move relatively fast, some medium fast,...
thank you Greg..
I'm still following

now waiting for the chart
dont be hurry.. i'm a patient man...
...
  • #25
  • Oct 5, 2010 10:51pm Oct 5, 2010 10:51pm
The S/R areas on the following chart are cases in point of what I mean by clearly having a barrier around recent s/r if and when I am contemplating taking a trade off any of them. When price breaks through barrier, I want to be in the trade within 3-5 pips outside the barrier. The idea of the 'barrier' is not to contain anything on the chart, lol, it is to contain myself - it is there to mentally discipline me, especially in a fast moving market.
Attached Image (click to enlarge)
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  • #26
  • Oct 5, 2010 11:04pm Oct 5, 2010 11:04pm
Quoting bandung
thank you Greg..
I'm still following

now waiting for the chart
dont be hurry.. i'm a patient man...
It would seem that my idea of fast is a bit slow for others! lol. I do have a hectic schedule, and a very demanding girlfriend who keeps me busy at nights! You got to see with me, bro!
  • #27
  • Edited 12:48am Oct 6, 2010 12:33am | Edited 12:48am
Scaling is most definitely a function of of your trade account size. You will need to determine your risk tolerance as a trader (I recognize that some traders can afford to and want to take a gamble from time to time), but generally: determine the risk tolerance of your account.

Take a $10,000 for example. When I apply mi maximum risk tolerance to that I get this: ($10,000 x 4) / 100 = $400. Considering my account size, I will only risk $400 on any trade.

Now to the charts: what is the height in pips of S from R? Determine this for every trade you are about to enter. In my trade example below, it is 38 pips.

Do this if you trade 1 pip = $1: 400/38 = 10. something. In this case you will likely want to trade 10 lots

What is the length of an average recent bar within the the S/R barrier before the bar currently active? If this is possible, measure it - quickly. If only one bar is actively breaking at the moment and its the one hitting a barrier, you will be in a blind trade - take the trade non the less. Only an ability to measure price velocity in past might be helpful to you in a situation as that.

In my chart example, the prominent bar in the middle measures 33 pips.

If I took a trade outside the resistance barrier, how much of a entrancement of that bar will I be willing to tolerate before price advances further. Answer in my case = 50%.

(Concept to continue)
Attached Image (click to enlarge)
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  • #28
  • Oct 6, 2010 4:57am Oct 6, 2010 4:57am
Thanks for sharing. I m interested to know more of the technique you used especially your entry point (where actually you discard all false indication). I also believe and agree with you that the charts itself provide most recent data. Keep it up!
  • #29
  • Oct 6, 2010 10:28am Oct 6, 2010 10:28am
Quoting Greg2011
In trade example marked Trade 1 - The clear signal is there to enter trade. Say that trade was taken, I would have stayed in it to the top at first resistance. Then we see where price began to retreat magnificently after that final bar looking like a pin bar. Now based on the amount of pipage gained on the way up, I was not prepared to give back more than 50 percent of it to stay in the trade so I would exit as second down bar which showed the same type of bearish momentum. If its an uptrend - there will be another opportunity to reenter - I always...
Thanks for sharing your system.

In your chart in the above posting, there was some hours of ranging, just before Trade Scenario 2, ...... the S and Rs were breeched but you didnt take the trades? What made you to stay out? What is your SL?
  • #30
  • Oct 6, 2010 10:55am Oct 6, 2010 10:55am
Hi Greg

Interesting thread, I like your style..!

I see you use the zig zag indicator, do you set your s/r from the last high an low of the zig zags. Does this then become your zone that you are looking for a breakout from. Ideally breaking with the 4 hr trend?

Thanks

WFX
  • #31
  • Edited Oct 7, 2010 12:30am Oct 6, 2010 5:37pm | Edited Oct 7, 2010 12:30am
Quoting cspip
Thanks for sharing your system.

In your chart in the above posting, there was some hours of ranging, just before Trade Scenario 2, ...... the S and Rs were breeched but you didnt take the trades? What made you to stay out? What is your SL?
I have reposted that area on chart and my interpretation of it. The following was actually how I managed it. Also note that sometime I just choose a place on the charts from past price movements that basically makes illustration of my main points clear to all.

So lets examine the area. Price came off a cliff. After price made its first support area, I was then expecting it to also make a new recent resistance area as well. And seeing that its a downtrend, the first R (shown) should not be too far away. I have already said that am always hesitant about entering trades off first s/r whichever came first. Now you may notice that the first time price tested initial S, it went through a little, but technically that area held in my mind. Then we see that bounce up to test initial R. Price broke through - a trade could have been taken there. Money could be made there - depending on the skill of the trader.

Then we see price returned back into the area bordered by the two last occurrences of S/R. I made a trade off the the (Pale Blue baseline) Minor S - targeting the very last area of higher proximity support (purple base line underneath). That turned out to be a good trade. Then price returned up to breach the last resistance (Pale green high Line). It broke through, But I never took that trade because of the R that is immediately higher. When price returned to break the very most recent support (Blue base Line), I took a trade there. It did not work out as you see. Then price move on to the previously illustrated Trade scenario 2.

I know this is a lot - I hope am clear to everyone though.

My stops are governed my my scaling concept. I do it as a percentage of S/R and price proximity bars rather than have it as a fix number. Each trade I make is approached uniquely and is governed by the nature of the recent S/R.
Attached Image (click to enlarge)
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  • #32
  • Oct 7, 2010 1:10am Oct 7, 2010 1:10am
Quoting Greg2011

I know this is a lot - I hope am clear to everyone though.

My stops are governed my my scaling concept. I do it as a percentage of S/R and price proximity bars rather than have it as a fix number. Each trade I make is approached uniquely and is governed by the nature of the recent S/R.
This is extremely interesting and helpful. Please keep providing examples when you have free time, I've always considered trading in a way like this but the way you explain your logic is really helping me to have a deeper understanding.

Thank you.

Cory
  • #33
  • Oct 7, 2010 2:02am Oct 7, 2010 2:02am
Am having a real comfortable trade here. Nice pipage so far.
Attached Image (click to enlarge)
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  • #34
  • Oct 7, 2010 2:23am Oct 7, 2010 2:23am
Anyone noticing how long price in the current active bar is taking to move further up over that peak bar in that live trade am in. Thats says something. Price velocity is changing currently!
  • #35
  • Oct 7, 2010 11:20am Oct 7, 2010 11:20am
Hey Greg, I'm trying this out on demo, and wanted to see what you think of my first trade. I bought EUR/USD at 1.3952 last night (5 over the high from yesterday), and put my TP at 1.4020 (because looking back on the daily charts I saw some strong resistance at that point). On the chart my entry was the arrow, and my exit was the x (I know, pretty lucky that I called the exact turning point.. that was thanks to James16 material.)

Pleae let me know what you think or if there is anything else I should have marked on the chart.

Thanks again,

Cory
Attached Image (click to enlarge)
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  • #36
  • Oct 7, 2010 4:58pm Oct 7, 2010 4:58pm
I love how this is a simple variation of regular sound support and resistance technicals.

But I'm concerned about a day like tonight. My breakout points are in line with the methods described here, but do you not take into consideration the strong uptrending channel to possible stop or slow the breakout that this would tell you to play?

Example, 1.3859 is an obvious support. but it is close to my uptrend. maybe 20 pips away.

maybe I just missed or misunderstood how much you don't pay attention to in the trade. If the high and low wasn't so close to my major trendlines today would seem clear.
  • #37
  • Oct 7, 2010 11:52pm Oct 7, 2010 11:52pm
Quoting Cbh123
Hey Greg, I'm trying this out on demo, and wanted to see what you think of my first trade....
Nice first trade. Liked how you planed it. Nice pippage. You have done a great job for your self there, and I will tell you why. I am sure in my previous posts, I illustrated that I am normally apprehensive about taking trades off a test of first resistance or support - in your trade example R. But this case is a clear exception.

After first resistance was made, price demonstrated consistent stubbornness going down to form the first support (almost touching prior resistance - where I had my trade entry). You could see a James16 styled pin bar formed there too. It could thus be inferred price wanted to go up. The noted increase in price velocity and the proximity of the First R would have made me enter that trade if I was not already in market.

Are you not able to highlight S/R areas more precisely with trend tool? I guess that is the only limitation of your charts! lol. That is my little quirk still - I like to see things neat and precise!

Congrats!
  • #38
  • Edited 4:24am Oct 8, 2010 12:33am | Edited 4:24am
Quoting techno79
I love how this is a simple variation of regular sound support and resistance technicals....
I do pay attention to that trend line, and especially so seeing that price has respected it ever so often in the past weeks. But one should note that price will break below that trend line some day.

In this situation the decision is up to the trader: its an issue of discipline. It is a clear signal if price breaks below the last S. The probabilities of trading say that one should try to act on all possible signals. Half of what one should do when and if one decides to take a trade like that must be to watch price range and its velocity when and if R should get broken. Price momentum tells me something.


Cheers.
  • #39
  • Oct 10, 2010 6:19am Oct 10, 2010 6:19am
Quoting Greg2011
It would seem that my idea of fast is a bit slow for others! lol. I do have a hectic schedule, and a very demanding girlfriend who keeps me busy at nights! You got to see with me, bro!
hmmm.. a very demanding girlfriend huh..
she is in an up trend Greg.. lol just becarefull with your recent R

Thank you
Keep on going Greg..
...
  • #40
  • Edited 1:18pm Oct 11, 2010 12:22pm | Edited 1:18pm
Quoting Greg2011
I illustrated that I am normally apprehensive about taking trades off a test of first resistance or support - in your trade example R. But this case is a clear exception.

Are you not able to highlight S/R areas more precisely with trend tool? I guess that is the only limitation of your charts! lol. That is my little quirk still - I like to see things neat and precise!

Congrats!
Thank Greg! I'll make my lines prettier for you next time. Could you explain the part where you say you are normally apprehensive about taking trades off a test of the first r or s? Do you mean, after it breaks an R or S, and comes back, you might not take the first new break?

Please keep showing trade examples, this is immensely helpful.

Thanks,

Cory
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