Hi all,
I am trying out a KISS method of trading. I trade breakouts of significant
S/R areas and daily highs/lows. In my admittedly limited experience, I have found that if a daily high/low is broken, or a significant S/R area, the price will tend to go in the direction of the break for at least 10 to 20 pips. I am looking to turn this knowledge into a system that will produce consistent returns.
Now, I know that this method works, but I keep getting shaken out of trades, probably because I pay too much attention to it. To illustrate, here are some trades I took earlier today:
1) B USDCHF 1.2303 - closed it when it went back to 1.2296, as you all know it reached 1.2380 or so.
2) S GBPUSD 1.8972 - closed it when it went back to 1.8976, thereafter it reached a low of 1.8870 or so.
Being a professional stock trader, I am used to being "in the money" the instant my chosen stock breaks out (i.e. i'm ahead 10 to 20 cents at least). The moment it goes back to my entry price, I take it as a sign that I made a mistake, and more often than not, exit my position. This is what my boss taught me hehe. Apparently, forex is a completely different animal.
Now, I want to ask the veterans here at FF, how much "breathing room" should you usually give a certain currency after it breaks out? In other words, how do you know if a breakout is false, or if it's just retracing a bit to gather strength? Is there a certain number of pips that would be the optimum stop for a strategy like this? I mean, should I just leave a 20 pip stop and then go do something else? Any suggestions, comments or opinions are welcome and will be very much appreciated. thanks for taking the time...
Nat
I am trying out a KISS method of trading. I trade breakouts of significant
S/R areas and daily highs/lows. In my admittedly limited experience, I have found that if a daily high/low is broken, or a significant S/R area, the price will tend to go in the direction of the break for at least 10 to 20 pips. I am looking to turn this knowledge into a system that will produce consistent returns.
Now, I know that this method works, but I keep getting shaken out of trades, probably because I pay too much attention to it. To illustrate, here are some trades I took earlier today:
1) B USDCHF 1.2303 - closed it when it went back to 1.2296, as you all know it reached 1.2380 or so.
2) S GBPUSD 1.8972 - closed it when it went back to 1.8976, thereafter it reached a low of 1.8870 or so.
Being a professional stock trader, I am used to being "in the money" the instant my chosen stock breaks out (i.e. i'm ahead 10 to 20 cents at least). The moment it goes back to my entry price, I take it as a sign that I made a mistake, and more often than not, exit my position. This is what my boss taught me hehe. Apparently, forex is a completely different animal.
Now, I want to ask the veterans here at FF, how much "breathing room" should you usually give a certain currency after it breaks out? In other words, how do you know if a breakout is false, or if it's just retracing a bit to gather strength? Is there a certain number of pips that would be the optimum stop for a strategy like this? I mean, should I just leave a 20 pip stop and then go do something else? Any suggestions, comments or opinions are welcome and will be very much appreciated. thanks for taking the time...
Nat