The way I trade breakouts is to first look for an area of support or resistance that has at least two touch points and when there is a break of this area I wait for a retest to enter.
I am wondering if it would be a possible strategy to trade simple breaks of structure and changes of character the same way. Instead of the condition of having two touch points, I would just find the swing point and use this as the support or resistance level, then wait for a break of structure or change of character and then the retest to enter.
Thank you for any feedback!!
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The question is, are you planning on entering off the retest of the BOS or CHoCH level or do you plan on entering where the retracement ends after price violates the BOS/CHoCH level? In most cases price will correct back past the BOS or CHoCH level before resuming the trend.
Looking back at GBPUSD in a trending market on the H1, there are 8 BOS/CHoCH and only 1 of them retested just a CHoCH level and another 1 came close to retesting a BOS level. The rest retraced and violated the level before resuming. In most of these cases selling at the retest of the broken level would be selling at a discount or buying at a premium.
You’re suggesting to rely on a broken weak high (resistance in an uptrend) or broken weak low (support in a downtrend) to become a strong level of support or resistance once broken. The charts suggest that it doesn’t work that way.
You’re on the right track with your overall logic of using a BOS or CHoCH, but you might get better mileage trading a breakout of consolidation and trading from an area of value in a trending market.
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this is exactly right
you can do that, but (IMO) it’s very likely that overall, you’ll lose more in win-rate than you gain in trade-frequency
i completely agree 
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I was backtesting on the 1M and 5M on GBPAUD and EURAUD, most often than not it seemed as if price respected these levels as support and resistance once it did get far enough for a good retracement.
I will do more backtesting to find what the actual winrate was, but there were a lottttt of winning trades. When there was a significant BOS or ChoCh, then if the retracement to the swing point held, the wins were usually very big, as if this was a good strategy to get involved in a trade at the beginning of a new trend.
I am just curious if other traders have noticed the same. Here are just a few of the winning trades I’ve found. I need to go back and find trades that would have met my entry condition but did not hold. I was looking for entries when there was retracement to the swing point and then a closure above the previous candles high, I would imagine this would give many false signals though.
What do you know about S/R method?
This is exactly it. A lot of these trades look like they were cherry-picked and realistically you probably wouldn’t have taken them, unless you had the strategy automated. That’s a big issue I have with back-testing, it usually gives you the best case (automated) outcome.
A lot of those trades are very shallow retracements or appear to be re-accumulation or re-distribution market phases especially considering the low timeframe.
You see this as 2 breakouts
I see the same thing as 1 false breakout (stop hunt) and 1 true breakout.
The next question is would you be able to catch the moves in real time without being faked out more often than not?
I was thinking I would take every trade I see that retraces back to the zone, enter when there is a closure above/below the previous candle high/low, set a stop loss of 15 pips, target a 1:3 and go break even at about 10 pips… If there is a fake out I would likely be break even already.
I see it would work very well on these two pairs, but other pairs I have looked at don’t retrace as often, so not many chances of entry.
I will test it out this week to see how well it works out.
What strategy do you use and find most success with? If you don’t mind me asking…
I’ll frame this another way by zooming out a little
I trade using supply & demand, market structure and price action with some smc and I use fibonacci as a framework.
I have tried using supply and demand, but my issue has been that price rarely ever returns to my zones… and then the trades that I do catch only go for a 1:1… what has been your experience?
No, I haven’t had that experience. Supply and Demand trading is a game of patience and being ultra selective in supply and demand zones used. I don’t identify a zone and take a trade from it. I identify zones and let price tell me which one is correct once price gets to the zone.
Which are your most successful pairs and how many setups do you find a day usually?
Thank you.
I mainly trade GBPUSD. After DXY, GBPUSD is my first stop in the morning, USDCAD in the afternoon, sometimes AUDUSD or AUDJPY after dinner. These are based on my time zone.
Other pairs that I like are EURUSD, EURAUD, and GBPAUD.
I find more setups than my trading plan says that I can take, but I work hard at filtering out the low probability setups.
Thanks, I’ll be sure to watch those this week.
What time frame do you trade on? I mostly watch GBPJPY on the 5 min timeframe in the mornings.
Most of my analysis is done on the 4 hour and 1 hour, with entires on the 15 minute all the way down to 15 seconds. I will look at 15 minute or 5 minute setups while waiting for price to reach a 1 hour and 4 hour setups zone.
Trading 5 minute breakouts must be tough. Is that your primary strategy?
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