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The Breaker Strategy - Trading Recent S/R

  • #61
  • Oct 27, 2010 2:25pm Oct 27, 2010 2:25pm
Quoting Cbh123
Greg, hope you're still around! I'd love to learn more about this strategy, and I'm amazed nobody else is posting. Please keep explaining and I'm sure more people will start to show interest.

Thanks!

Cory
I am currently working on some images that I think might go a long way in helping to bring across my concept of rick management and its components.

Cheers!
Greg
  • #62
  • Oct 27, 2010 4:29pm Oct 27, 2010 4:29pm
Quoting Greg2011
I am currently working on some images that I think might go a long way in helping to bring across my concept of rick management and its components.

Cheers!
Greg
Looking forward to it!

Thanks,

Cory
  • #63
  • Oct 28, 2010 12:07am Oct 28, 2010 12:07am
RISK MANAGEMENT

I have already emphasized that risk management is important, if not the most important thing in trading. Risk management involve initially identifying the portion of your account that you are comfortable risking - the risk %. And then it also involves managing that risk - figuring out how to reduce it.



I have already showed how:
I calculate my riskable amount - (4% of a/c)
I scaled my risk percentage to match with the recent S/R - (4% of a/c) / height of recent S/R. [A momentum bar, when possible, can be used to do this calculation as well and in effect maximize potential reward relative to risk.]


Now, just because I have identified my risk percentage and scaled it to the s/r, does not mean that my stop loss is always placed at the R if I enter a trade off S or vice versa. More often than not the S/Rs are wide enough and provide an opportunity to scale down risk within. The closer recent S/Rs may require that stops be placed at S and R vice versa. But you will find that with these signals you will be able to comfortably reduce the risk percentage by choice to even 2% or less and still make good money. You will also be out of a sour trade without much affect.

With the above said, the question then arises: At what point between s/r may we comfortably say a trade is violated?

To fully answer this question, we may need to examine the way price moves on the charts. I will also submit to a general rule that I will not allow price to retrace from my point of entry to more than 75% of the height of the recent S/R: 50% is my ideal figure with flexibility.
  • #64
  • Edited 12:43am Oct 28, 2010 12:38am | Edited 12:43am
The height (marked by yellow vertical line) from the two barriers in the following chart is 76 pips. A 75% retracement (marked by ash horizontal line) of s/r height would be 57 pips if trade was taken off the break of the recent S. Now as you may have noticed. Risk would have been scaled to the 4% of account /76 pip s/r distance, and thus this trade, considering the 75% tolerable retrace level, if price were to have turned and gone there, would be less than my 4% risk allotment initially.
Attached Image (click to enlarge)
Click to Enlarge Name: tolerable retracement of sell.gif Size: 21 KB
  • #65
  • Nov 1, 2010 6:38pm Nov 1, 2010 6:38pm
Quoting Greg2011
The height (marked by yellow vertical line) from the two barriers in the following chart is 76 pips. A 75% retracement (marked by ash horizontal line) of s/r height would be 57 pips if trade was taken off the break of the recent S. Now as you may have noticed. Risk would have been scaled to the 4% of account /76 pip s/r distance, and thus this trade, considering the 75% tolerable retrace level, if price were to have turned and gone there, would be less than my 4% risk allotment initially.
Thanks for explaining this Greg! You also mentioned a sl placement that had something to do with a large bar, is that pretty similar to this method except just a percentage of a large bar?

Cory
  • #66
  • Nov 2, 2010 2:38am Nov 2, 2010 2:38am
Quoting Cbh123
Thanks for explaining this Greg! You also mentioned a sl placement that had something to do with a large bar, is that pretty similar to this method except just a percentage of a large bar?

Cory
Yes, I did mention that. But before I attempt to elaborate on how I go about it, I would like to entertain a discussion on how price moves generally. This will help you to understand that stop approach fully when I get around to it.

Understanding the movement of price [ at least my interpretations of how it moves ] will help us to:

a) Understand at what point within recent S/R price has made invalid our trade entry
b) Take pips gained/profit more substantially
c) Understand when to not tolerate a loss base on recent price movement - not even one pip
d) When not to "take bull" from price - if its acting shady, get out, stay out!

Cheers,

Greg
  • #67
  • Nov 2, 2010 2:53am Nov 2, 2010 2:53am
One of the following chart illustrate something about how price moves. When its wants to go in a direction, its tends to go in a direction. This is one of several things I look for on charts. Is price demonstrating a pattern of faithful self direction? What general pattern does price take when it is going in a direction?

The other chart is the control - the same portion of charts but unmodified and unillustrated.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: how i see price.gif Size: 14 KB
Click to Enlarge Name: original portion of chart.gif Size: 17 KB
  • #68
  • Nov 3, 2010 12:10am Nov 3, 2010 12:10am
Price going somewhere tends to not test the low of the prior price bar.
It also tends not to fully retrace it. It more often than not retrace less than 50% of prior price bar progressively before continuing it’s direction momentum.

So how can this knowledge help us to limit further our stop losses? If we know that price showing momentum in a direction tends not to test the prior bar’s low in most cases we then can thus put a stop a the prior bar’s low. A break of the low, depending on where this occurs, will be a signal to get out the market. One has to observe price for a while to fully understand this - or at least I recommend that one does.

A balance between this stop approach and the s/r percentage approach is ideal.
  • #69
  • Nov 3, 2010 2:48am Nov 3, 2010 2:48am
Hi Greg,

Please i will like to ask, if you have used mt4 on blackberry? am thinking of going mobile, also good job you are doing here.
D labour of a fool wearieth him cos he doesn't know how to enta d city
  • #70
  • Nov 3, 2010 4:56am Nov 3, 2010 4:56am
Great thread and clear explanations. Haven't seen many if any better than this.
Interesting to see so few people interacting here....Greg, maybe you made it too clear so not much else to add...lol

Keep it up, I am testing and following your "Strategy".... I'll post some trades when time allows.

Cheers
  • #71
  • Nov 16, 2010 3:01pm Nov 16, 2010 3:01pm
The zigzag indicator that plots the last four values.
Attached Image (click to enlarge)
Click to Enlarge Name: Zigzag_OCP.jpg Size: 69 KB
  • #72
  • Nov 16, 2010 3:05pm Nov 16, 2010 3:05pm
Zigzag with the last four values plotted
Attached File(s)
File Type: mq4 ZigZag_OCP.mq4   7 KB | 367 downloads
  • #73
  • Edited 9:35pm Nov 18, 2010 9:14pm | Edited 9:35pm
Quoting renatocolive
The zigzag indicator that plots the last four values.
When I started developing my method, I started by looking at zz indicator. Its does give good signals but sometimes its does not precisely tract price the way I would like to have price tracked. Thats why overtime, as my skills at framing s/r developed, I abandoned the zz altogether and instead stayed with manually identifying recent s/r in a non subjective way. A break below the first green box to the left was a good trade that zz did not identify for you. See chart below:
Attached Image (click to enlarge)
Click to Enlarge Name: chart.gif Size: 16 KB
  • #74
  • Nov 18, 2010 9:31pm Nov 18, 2010 9:31pm
Quoting bigpips
Great thread and clear explanations. Haven't seen many if any better than this.
Interesting to see so few people interacting here....Greg, maybe you made it too clear so not much else to add...lol

Keep it up, I am testing and following your "Strategy".... I'll post some trades when time allows.

Cheers
They do say profitable trading is boring. And thats true. Maybe this style is too boring. Maybe my charts are not pretty enough! lol. Who knows, maybe some traders prefer to raid the market for profits instead of waiting for the market to give the profits to them. In any case, I rather the latter.

Cheers & Profitable trading,

Greg
  • #75
  • Nov 19, 2010 5:20am Nov 19, 2010 5:20am
As you perform the identification S / R manually without being subjective?
Quoting Greg2011
When I started developing my method, I started by looking at zz indicator. Its does give good signals but sometimes its does not precisely tract price the way I would like to have price tracked. Thats why overtime, as my skills at framing s/r developed, I abandoned the zz altogether and instead stayed with manually identifying recent s/r in a non subjective way. A break below the first green box to the left was a good trade that zz did not identify for you. See chart below:
  • #76
  • Nov 19, 2010 7:19am Nov 19, 2010 7:19am
Quote
As you perform the identification S / R manually without being subjective?
Ha ha. Well. I try to identify my manual recent S/R’s as objectively as possible. Where they are, I try to identify them as such - with the goal of identifying all of them. LOL

Cheers Mon,

Greg
  • #77
  • Nov 30, 2010 6:40pm Nov 30, 2010 6:40pm
The past few weeks have been good to me - currently in this trade!
Attached Image (click to enlarge)
Click to Enlarge Name: active trade.gif Size: 17 KB
  • #78
  • Dec 3, 2010 9:33am Dec 3, 2010 9:33am
Currently in this trade.
Attached Image (click to enlarge)
Click to Enlarge Name: active trade.gif Size: 15 KB
  • #79
  • Last Post: Apr 19, 2014 12:41pm Apr 19, 2014 12:41pm
Quoting Greg2011
Currently in this trade. {image}
Hi Greg2011,

I know I am late to this thread but just stumbled across this when researching the internet as I am new to trading FX.

I was wondering how you are measuring your Support/Resistance, as I am new to trading just could do with a few tips to put me on the right path. Also do you still use this trading strategy?

Hope to hear from you about this.
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