Trading Breakouts - Are They For Mugs!? 😦

[@ukspreadbetting]

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[@dakaodo]

As with every other TA tool, breakout setups need context. At various points in my trading I've gone both ways on reversals, breakouts, trends, and ranges. I'm currently in a phase where I extensively use breakout ATTEMPTS for my setups constantly. In forex, certain times of day/session/week/month are more likely to see continuation in general, including any strong attempted breakout candidate. I found lower timeframe breakouts are a great way to get into any higher timeframe move -- range swing, countertrend reversal, retrace failure to leg back into with trend trade. And I mean LOWER timeframe. On a HTF, what looks like a micro range, range block, barbed wire (a series of candle bodies largely alternating up/down next to each other, usually small bodies but sometimes in higher volatility pressure cooker conditions will see medium to large bodies) will actually be a clear range on a lower timeframe. This range can often look like even just a single small body or doji candle on the HTF. Single breaks are low-odds by themselves, but a sequence of two can signal significant divergence for a strong HTF reversal candidate. Other filters/conditions to improve breaks are major HTF support resistance nearby, recent impulsive HTF moves (price will either attempt measured move continuation or, after multiple attempts, will attempt reversal), and somewhat rarely extended low volatility tight ranges that almost inevitably NEED to break out. On any SINGLE timeframe, sure, something like 2/3+ of breakout attempts fail -- what people call fake. In actuality, SOMEONE put millions on the line to probe a level for possibility of breakout -- it's not fake to them, but it could be a trivial amount to them. Whether the breakout is real or not is a matter of sufficient additional people committing money to continue it.

[@processpatience3206]

Well said Mr Fx Gladiator!

[@FreePalestine8096]

"Buy on red, sell on green"... totally agree.

[@callengaza1928]

I think using Buy Stop Limit or Sell Stop Limits orders can help entering a trade that had been confirmed to be going in your direction and has already done its pull back in full.the downside is you lose some good movers which do not retrace to your limit trigger

[@benixmaximus]

Most people would probably disagree with me but I'm a catch the falling knife guy. I look for a pattern like a falling wedge and use volumn and pitchforks etc to aid. As long as I'm bullish on the stock then I'd rather hold the stock at a highly discounted price than buy high at the breakout zone. I also look to scale out after parabolic moves once the stock reaches the 61.8 on the fib or reaches my parabolic target. Ideally I don't wait for too much confirmation on higher time frames because by then you lose to much value. Buy low and sell high.

[@konikacariapa3289]

Yes, I agree, you end up buying at a Supply level and get knackered almost always. I use stochastics on my charts so I tend to buy pullbacks at Demand levels. Thanks for these very succinct and informative videos.

[@theNEWTful]

I mostly trade pullbacks after big moves....but at times a breakout with clear air to the left can move well.

[@howardhill3395]

it would be helpful if you showed examples when and when not to buy breakouts

[@ukspreadbetting]

Check some of the other related videos in the description.

[@mdfel1]

I trade news, conservatively, but not breakouts. Buying high just scares me too much. If a wedge or flag is ending near market structure it is a different story.

[@Hempcretinglifestyle]

I'm still waiting for a breakout to come back around I'm 7hundred points down waiting for the next leg up ,2-3 spread bet lessons per day so at least a learning lesson comes from it if I don't get it back up there

[@processpatience3206]

80‰ of break outs fail. On any chart only 10% of the bars are in a breakout. Great video brother. Its the optimism of a break out that kills. I caught that 100 pip bear run on the GBPJPY this week, and you're right have been looking for breakout swings ever since. Yeppp, alot of pain haha. Thanks again needed to hear this

[@IAMT3XAS]

better to take the trade before the breakout...better risk to reward

[@lombardo141]

They used to work consistently back in the day. Now the smart traders know that move and stack the offers to space. 👀

[@dakaodo]

They still do. Competition and liquidity due to electronic markets mean the pace of price action sometimes drives the classic patterns into much lower timeframes. If you've read any book on trading published by Wiley, all those stodgy old authors write about the same technical analysis and price action methods using H1, H4, D1, and W1 charts. They rarely if ever refer to M1, M5, or tick charts of 1-10 ticks. But pick any random day, any random hour, and divergences, ABCD, double tops, flags, triangles, wedges, cups, head and shoulders, etc etc all show up regularly. I prefer the Wyckoff way of describing price action, but it's all the same price action. Classic price patterns/action don't work well on classic timeframes like H1, at the London or New York open bc there's too much money and too many players, many of them automated systems. Right at the open and at certain moments, even M1 is too slow. But most of the day M1 is a good way to look inside the H1 or H4 even if you have zero intention of trading M1 itself. And at market opens, I wouldn't touch trading without a tick chart.

[@lombardo141]

@@dakaodo Wow! thanks for that knowledge.

[@Discoworx]

DD. I guess it depends on your style of trading? Scalping/short term trades on lower timeframes. Higher timeframes for lazier traders or wo the time to constantly watch. Or are you getting a pattern on say a H1 and then dropping to M5 to refine your entry? Thanks

[@NineSeptims]

Never found success in breakout strategies it’s a game of chasing

[@dakaodo]

It doesn't work well if you chase on a single timeframe. Multiple TF analysis really helps by filtering for HTF trend(s), which puts the breakout setup in context on the LTF. e.g. if H1 is showing good downtrend, then I can look on M1 or M5 for downward breakouts out of retraces/countertrends that fail to continue up. It works a lot better than trying to catch a falling knife by guessing where the reversal high or low will be. :D

[@gedalianiasoff4021]

I trade after the breakout when i see a breakout i wait for the dip and after it looks valid enough and creates an reversal and ect then i take the trade

[@NineSeptims]

good advice guys