Does breakout trading still work?

ash2w

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hello.

i was wondering i have been learning from a course that is around 5 years old that involves break out trading. using support and resis lines, flag patterns , channel lines, piviot lines and the Fibonacci analysis. is this basic method still successful in todays forex market?
 
Breakouts are no more than a 50/50 trade in any market , got to be taken in context , dont know what you are looking at but would suggest you lose the fibs and pivots , s/r is good and flags too.

So if you do want to trade breakouts , either trade the first pullback or trade the failure.
 
Breakouts are no more than a 50/50 trade in any market , got to be taken in context , dont know what you are looking at but would suggest you lose the fibs and pivots , s/r is good and flags too.

So if you do want to trade breakouts , either trade the first pullback or trade the failure.



hi thanks for the reply. what kind of methods are are less 50/50 and have better odds? in fx market)
 
When I say breakouts are 50/50 I am talking about placing a buy / sell order above and below the range and waiting for one to trigger and using the other as your stop.

If you trade either the first pullback after the breakout , or the breakout fails and you trade the failure then you are starting to manage your risk / reward and as a crude rule of thumb , once you get good at identyfying these 2 patterns then probability is in the region of 70/30 at worst.

But most imprtant thing is the context in which the range develops , and how long it has been in place , for example if you have had a strong move up , then the market pulls back , breaks a trendline then moves back up to retest the high , forms a range then a breakout to the upside fails , then you have a 90% plus probability of a succesful trade to the downside.

So can't give you a simple answer , but if you have the discipline to only trade first pullbacks and failures you would have a very profitable trading plan, i.e. a 2:1 R/R on a 70% probability trade.

Find the patterns that appeal, put the hours in to understand all their nuances , and within time you will just know when they are going to work and when you need to sit on your hands.
 
Breakout trading will always be an excellent method if applied correctly.

Try to think what is happening and what the breakout means.
 
So if you do want to trade breakouts , either trade the first pullback or trade the failure.

I've had as much success trading failures. Many times a failure is just a pullback then the breakout continues on, so I get 2 trades out it. Patience is key as always.

Peter
 
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