Question about trading style / strategies

Ok, I have been learning this stuff for a little while now, and it has occurred to me that I could trade in a number of different ways.

What I want to know, is if I describe these ideas I have had (and I know there is no way they are original to me :-), could someone tell me if they have a name and if they are good or bad ways of trading.

Ok, I have noticed the market hits support / resistance areas for a while then will break out and carry on in a certain direction.
If I were to identify these points, and set trades (stops and limits ?) to come into action at a certain price on the breakout, (I realise there can be false breakouts) on both sides of the breakout, is this common practice ?

Also, regarding the direction of the break out, if I were to put in place a series of trades to be triggered as it happened, what is this technique called ?

Do my questions make sense ?

Michael

False breakouts are very common, the best way to tell the significance of a break out, I think, it to see how long it has been since the market last made that high/low. For example, a close above 120 day high is highly significant and means that market will most likely continue to move up for sometime. A move higher than a 10 day high isn’t nearly as significant.

How to trade breakouts… or how I trade breakouts more specifically!

Typically, most traders will place a pending BUY or SELL order 1-5 pips outside of the triangle or channel to ‘catch’ the breakout. While this may seem like a logical thing to do, it’s actually a risky way to trade. Why you ask…

This is because breakouts are periods of time where there is a lot of emotional trading in the market. What I mean by ‘emotional trading’ is that there will be many traders who are letting the emotions of fear and greed guide their trading actions… and it is during these times that the institutional traders like to prey on such behavior. The only thing you’d need to know is not to trade on the initial explosion.

So how do we properly trade on breakouts?
The trick here is to first let the emotional trading subside, and wait for the market to settle down and THEN tell you whether the bulls or bears are taking over. Wait for the candle to fully form (wait for the new candle) before placing our trade.
Once the breakout candle has completely formed and is shown to be a valid breakouts (the candle does not close back into the channel), we will place our pending trade.

Something like that.

yes, I can see that. What I meant was, take for example a line of resistance
at 1.50000

I plan for a breakout to the upside, so I put in a series of Buy Stops, say 10 at

1.5010
1.5011
1.5012
1.5013
1.5014
1.5015
1.5016
1.5017
1.5018
1.5019

each with a 2 pip TP and a 10 pip SL.

what would you make of that kind of strategy ?

Scalping… and honestly, everyone I know (traders) don’t scalp! There is too much of a chance of losing scalping (in my opinion)! Its fun… the adrenaline is pumping… for me… the risk to reward ratio is not there!

And when I say scalping… I’m thinking of low time fames (1, 5, 15 minutes)… I usually don’t trade under an hour and that’s too short most of the time! My TF of choice 1 day. Also, I don’t shoot for small profits… I look for 100+

Really ? so do you trade the charts on a daily basis ?

I do… my style of choice is Ichimoku!!! It tells me everything I need to know! What I do is look for a TS/KS cross… wait until a new candle forms (D1 TF) and enter my trade… they last anywhere from 1 day to 3 weeks… the profit normally is 100 – 2000 pips. It all depends. Plus I only trade the JPY pairs (any of them)

Quite right Rengoku.

Scalping causes the adrenaline to rush and then your account crashes and burns (yes, it will happen to you too - it’s not just everyone else). As a new trader, stay away from anything below 4H charts is some of the best advice I can give you.

Might seems boring to wait and wait… and wait. But trading isn’t a video game, it’s supposed to be boring in the sense that emotions should be very well controlled and you should know what you’re doing. Then it becomes just another thing you do and the excitement is no longer present.

That’s where you want to get, and scalping will never ever get you there from my limited experience anyway.

IMHO the bigger the TF the bigger your SL and the lower your lots size are and so the smaller the pip value.

the principal chart studies (line studies, pattern studies, volume studies) should be done in big TF (the bigger they are the more reliable is the information you get)

but if you don´t want to use big SL you should get a system that give you entrys very early on the move. and for that you should use smaller TF.

for what i´ve learn, any system you use only tell what to do. but the most important thing to trade is know when and where to do it, and this when/where you can only know them by doing the big TF chart studies.

That’s a matter of taste and so on, but I firmly believe that a new trader should start with 4H and up.

Once you can show 3 consecutive profitable months like that, then sure if you really want to - try the faster time frames.

Personally I have a full time job and after much testing etc I came to the conclusion that for me Daily is the best fit, sometimes 4H when possible and why not some weekly trades.

Personally, I say 1 hour and up… but my trades are daily charts… especially with Ichimoku! Anything less is NOT reliable! As for boring… I don’t think it is… to me trading is fun and exciting… especially when you see you account increasing :slight_smile:

I get the impression there is a lot of opinion about trading. I have time on my hands at the moment, so I am happy to learn something about trading on the smaller time frames. Mainly because they oscillate faster and I can join in. I had not considered trading over days, or even weeks. If the market trends over several days, how do you know when to take your profits ?

I’m asking this as a complete beginner :slight_smile:

Also, Rengoku, what is Ichimoku ? and TS/KS cross and D1 TF ?

“If the market trends over several days, how do you know when to take your profits ?”
You learn the few candle indications that the market has reached a turning point or you wait for a reversal indication from IKH. Another method is to close your trades Friday prior to the market closing for the weekend… the beauty of the long trade is (this is what I do) open multiple lots… example is .2 when your trade hits the point designated as your breakeven point (whatever makes you comfortable) you close .1 lots and move you stoploss to breakeven… this way you are no in a free trade and you are guaranteed a profit!
Ichimoku is a trading system… the following description is taken from kumotrader…
Ichimoku Kinko Hyo is a purpose-built trend trading charting system that has been successfully used in nearly every tradable market. It is unique in many ways, but its primary strength is its use of multiple data points to give the trader a deeper, more comprehensive view into price action. This deeper view, and the fact that Ichimoku is a very visual system, enables the trader to quickly discern and filter “at a glance” the low-probability trading setups from those of higher probability.
I suggest if you are interested go to Main Page - IchiWiki - The Definitive Reference to the Ichimoku Kinko Hyo Charting System and read about IKH (Ichimoku Kinko Hyo). If you are interested longer term trading that is! Since IKH is unreliable under the 1 hour chart… and in my opinion its unreliable under the 1 day chart! If you do go there and read up on IKH… I really would only consider the TS/KS cross system.
TS is The Tenkan Sen
KS is The Kijun Sen.
D1 is 1 Day
TF is Time Frame

Sorry about the acronyms

The thing is… honestly… I think that new traders need to stick to higher timeframes! A lot of people think that the short timeframes are easier… but the movement will seriously wipe an account fast! High timeframes are a lot more reliable and the profits are a lot bigger!

Have you went through the courses here??? They are really good and will give you an understanding of what this is all about.