A break or not a break, that is the question.

[barjon]

Many aspects of TA and trade entries rely on a break of support or resistance of one sort or another.

Fair enough, but what - for you - constitutes a break? A tick, a point, an x number of points, a percentage, a time above (below), a close above (below), a reaction not re-crossing the line, or what.

Me? I don't have a fixed definition. If there's good momentum I'll mostly enter on a point or two break, if it's staggered through I'll mostly wait for a close and maybe see where any reaction goes on a lower time frame.

good trading

jon

 

[tomorton]

Good idea, I bet we've all been sucked into a position that just breached a target level then reversed.

I am trying to improve my daytrading and have picked up this - using candlesticks of your preferred time period, look for first candle to close beyond your target, then enter during period of next candle if it pushes further past target than extreme of the first.

 

[wasp]

If I was looking at one on say, a 60m chart, I'd zoom down to 15m/5m for a small pullback to give me more faith in the breakout.

 

[rathcoole_exile]

all too often though, i have observed, people give up after one failed attempt at breakout, then miss the big move they had correctly anticipated.
price has to break one way or another eventually, so I keep my stops tight and re-enter, re-enter, re-enter .....
the discipline is the hard part - not giving up, 'cos Sod's Law says that the moment you cease re-entering is the moment price explodes

 

[fibonelli]

Successful backtest of the prior support/resistance/stops rinsed. Then enter beyond the first breakout price level with a tight stop.

 

[senyorqueso]

Enter at the b/o level on the retrace to it. Why? Too many right on direction at the breakout, too many wrong, or thinking they're wrong, on the retest.

 

[Splitlink]

Many aspects of TA and trade entries rely on a break of support or resistance of one sort or another.

Fair enough, but what - for you - constitutes a break? A tick, a point, an x number of points, a percentage, a time above (below), a close above (below), a reaction not re-crossing the line, or what.

Me? I don't have a fixed definition. If there's good momentum I'll mostly enter on a point or two break, if it's staggered through I'll mostly wait for a close and maybe see where any reaction goes on a lower time frame.

good trading

jon

I prefer to watch the breakout and trade the first pullback.

 

[Splitlink]

Enter at the b/o level on the retrace to it. Why? Too many right on direction at the breakout, too many wrong, or thinking they're wrong, on the retest.

Any relation to anyone around here? A Catalan, perhaps, or doesn't your keyboard have an "ñ" ?

 

[rathcoole_exile]

anyway, its a cheesy name

 

[senyorqueso]

Any relation to anyone around here? A Catalan, perhaps, or doesn't your keyboard have an "ñ" ?

que?

 

[Splitlink]

No, no, no! I'm not starting a different lingo on this thread. :cheesy:

Split

 

[ceydababy]

I look to do what Split suggests hit the first pullback. Another good way to trade a breakout is to watch the price. If it consolidates above/below the resistance/support area it suggests to me that traders are happy with the new range. Price should then move in the way of the breakout.

In terms of a pullback I don't really like to see the price travel back through the support/resistance line. This then becomes a bit of a grey area. IMO of course.

 

[Splitlink]

I look to do what Split suggests hit the first pullback. Another good way to trade a breakout is to watch the price. If it consolidates above/below the resistance/support area it suggests to me that traders are happy with the new range. Price should then move in the way of the breakout.

In terms of a pullback I don't really like to see the price travel back through the support/resistance line. This then becomes a bit of a grey area. IMO of course.

I don't like that, either. As you say, the pullback has to stay beyond the BO level.

I think that that is a fairly safe way to trade a trend--as far as anything in trading is safe. Trading the breakout has problems. I have often thought that the guys watching for a break on the swing trading threads go through a frustrating time waiting to see which way the price is going to go.

 

[barjon]

..........help if you define breakout ...............

Andy

That was really the question I had in mind when I asked "Fair enough, but what - for you - constitutes a break? A tick, a point, an x number of points, a percentage, a time above (below), a close above (below), a reaction not re-crossing the line, or what."

It doesn't matter if you are considering s/r levels or individual candles.

good trading

jon

 

[Newtron Bomb]

rather than try and put a name on the pattern, like a triangle using trend lines. I would rather mark off the extreme boundary of S/R levels for that pattern. This is where it is contained and in real time the name of the pattern can change or the trend lines etc can change several times. We only know what the name of the pattern is after it has broken out and gone to target if it gets there.
Thats step one
Step two... wait for price to then move beyond those extreme boundary levels. Typically I then drop down to my losest entry time frame and trade the first pullback. This low time frame entry might take multiple attempts before its gets going fully. Assuming for a moment that the first pullback is stopped out. I'll then either look at the next time frame up for the same pattern... or adjust my res high and include what at the time might be a false break out to try to ID the genuine real time resistance.

Deails of the break out pattern below my signature

Enjoy
NB

 

[brooks79]

I would make the answer to this question very simple.... A break is a break as defined in your trading plan. If you have NO trading plan then you are just gambling, and you might as well buy a ticket to Las Vegas..... That's just my opinion, yours will probably be different...

 

[brooks79]

Newtron, I really like the method you use on your breakouts, it would seem that more times than not, price will retreat after initial break before continuing initial direction. I have found this to be a very simple rule to understand, a very hard rule to adhere to when trading.... Thanks for all your input.

 

[Mr Flibble]

Yeah I second that Newtron buddy. Nice vid btw. Its is a trading plan that I was doing already but without the retracement part. And I too love those Japanese candles to plan the actual exit. Shooting star for the top and the much more common hammer to mark the bottom. Just go with the flow dudes the market will just talk to you if you just watch its action. Talk to it..ask it questions and you too could be on meds like me.

 

[Omoh101]

I prefer to watch the breakout and trade the first pullback.

When unsure of the direction of the breakout, does anyone use a LIMIT BUT & a LIMIT SELL simultaneously order to get into the trade ?

 

[Splitlink]

When unsure of the direction of the breakout, does anyone use a LIMIT BUT & a LIMIT SELL simultaneously order to get into the trade ?

You can't be certain of which way it is going to go. I leave the turns and trade the first pullback afterwards. There seems to be enough profit at that stage and it is safer. Wait for the break, though or, if you like the look of it before it hase broken, go for a low risk entry near the other extreme.

Forget triangles (my opinion :whistling) There has been so much written about all this stuff that the institutions' software has got it all accounted for and they see it before you.