Hi Guys, I’m new to trading and have been working my way through the school of pipsology (so much information!:34:) I’m trying to work with the cowabunga system but haven’t quite got the hang of it yet (I’ll keep working away at it ) . But I have been having more success trading breakouts on the economic calendar using buy stops and sell stops , having success in four straight trades in a row ( I know this doesn’t constitute a proper test), this seems such a simple system can anyone tell me the downside? (probably a rather naïve question ,but like I said I’m new here : eek:) any information would be gratefully received.
-) Usually there is no convenient place where to put stop loss without making it too wide.
-) Price tends to break out with ‘‘jumps’’… so slippage is an issue.
-) Since usually there is a pullback anyway it makes more sense to just buy pullbacks.
Slippage depends on the broker, some have more some less. I am happy with my broker where slippage has never been an issue to me and my trades are executed at the price I entered my pending order. Trading economic data is not what I do as to me it is more of a guess you take if you enter your trade before the release, and after the release it has moved already. Again, that is my opinion and there are traders who have success trading news.
As long as you have success with it and remain committed to your risk management there is no downside.
The hard part of trading isn’t the mechanics; it’s sticking to your trading plan and developing the discipline to wait for the right opportunities to present themselves. So yeah; if your broker is holding up well on the execution and you’re having success with break outs while adhering to your trading plan/strategy; there’s really no great downside to it. Just be aware that if you’re trading news announcements; I’ve seen on several occasions where price will launch off in a direction and immediately whip back; or even completely retrace over an hour or two. I definitely do not stay in long. Once I hit my target profit mark I generally bow out.
Good advice, doing the same things over and over give your trading consistency. Without that you’ll struggle. A good example of what stonecold is talking about in terms of trading the news and it heading off in one direction only to whip back occurred today around NY open. US GDP came in below expectation but still positive, the GBP/USD initially traded higher but then resumed it’s downleg. Therefore though below expectation not disappointing enough to halt the dollar.
The downside is false breakout and or bull or bear traps where it breaks out and breaks back into the range and sometimes even breaks back out the other side of your trade if you play breakouts place your stop at the other side of candle that made you take that trade so the most you can lose is one candle and not get caught like a deer in headlights when it is just a stop run before it comes back into range or it is a stop run and breakout in opposing direction. another words be very carefully until you learn the traps the pros and banks do to trip up new retail traders see these banks and pros are trading volume and pay more in commission then we do so they have to run there trades by running price into stop to gain liquidity for there trades so the commission don’t kill them on there big trades these pros and banks are buying major size like 50 and 75 million and if they get slipped on fills due to illuidity it could cost them two or three times the commission compare to when they get a fill where luquity is and you can actually see these spots where they get fills on the charts look for where price took off after a period of slow moving or consioldating markets that is where the big dogs are getting there fills as always these are just areas or zones so some of these pros my try to front run those areas to get better fills as well watch the blue prints of the big traders and watch how price reacts to these areas and you will not really need indicators to trade once you get the hang of it most indicators are only confirming what price has already done anyway so look at the candles for confirmation as in strength in move or possible reversals formations.
Thx for all the great replies guy.
I use the bi-directional setup that’s in the school of pips , with 20pips stop loss. I like the fact I know when I’m going to trade, the only problem I have is watching the trade which usually leads me to taking profits early , but hey who am I to moan about profits.
Actually, getting into a habit of taking profits too soon can hurt you in the long run. The idea is to take more than what you risk in your risk to reward ratio. So if you consistently exit too soon, you have far less of a profit cushion to break your fall if you wind up losing some in a row- which you eventually will.
If you have a hard time with it, use a pre-determined Take Profit level and force yourself to stay away from it until you’ve given it time to do what it’s going to do. That’s a bad habit you need to break.
Trading news can be good, and you’re probably a natural at it but one of the downsides i have experienced is that price can go one way and then retract and come back down within seconds. It all depends on your methodolgy but in general that’s one thing which prevents a lot of people doing it.
Again, good advice.
When a trade is profitable I just adjust my stop loss so that if it moves against me I still cash out and if it continues to move in my favor I keep adjusting the stop loss so that my guaranteed profits increase. That prevents me from exiting a trade prematurely.
Aye, that’s a good approach. I do something similar with break outs. With trend trading I just advance the stop to behind each bounce and continue to wait pretty much.
I don’t see a breakout.
There is an extreme volume, high range, down bar followed by an inside bar and then a bunch of bars still ranging within the high and low of the first. The first bar is acting as resistance going forward.
do anybody know how to trade fractal breakouts?