Breakout trading

Beginner Questions Candlesticks, Chart Patterns, and Price Action
1

Could you provide some breakout trading tips based on your experience?

2

What you need is right here, Ranjith :wink:

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3

Personally, I haven’t had the chance to successfully trade breakouts. :sweat_smile: Either I’m too eager or I’m too late. But if I would give a tip, it’s to use indicators and try to look for a system that will help you spot these breakouts more efficiently. :sweat_smile:

The whole Grade 11 section on the school here (beginning with the lesson shared by Jane here) dives into the details for this. :blush: But it might also be helpful if you demo trade while you’re checking out the “theories” behind trading breakouts. :smiley: If you don’t mind, are you currently demo trading? :blush:

6

Is this the simplest ever break-out pattern? -
Larry Williams’ Smash Day?

Bullish -
Look for a daily bar with a Close lower than the previous day’s Low.
Set a buy order at today’s High.

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7

Probably. There’s a slightly similar one by Walter Peters (of “Naked Forex” fame), but his uses an indicator as well.

How are you getting on with “Smash Day”?

8

It is definitely good fun to see the entry at breakfast time and bank the profits at tea-time.

But holding multiple days is better.

Win rate is ridiculously high, though most entry orders are not triggered the next day. I find it’s valid to leave the entry order pending for say three days.

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9

It makes you wonder (by which, of course, I mean that it makes me wonder!) what the win-rate and especially the profit factor would be, if you tried doing this from faster, constant-volume charts with a very low R (maybe 0.2???). I feel a little research project coming on … :nerd_face:

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10

Focus on strong price movements that surpass resistance or support levels, and always set tight stop-losses to minimize risks.

11
  • Identify strong support/resistance levels
  • Wait for confirmation
  • Use appropriate stop-loss orders
  • Consider volatility
  • Combine with other indicators
  • Beware of false breakouts
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12

thanks for sharing the link, really help

13

Identify Key Levels: Look for significant support and resistance levels on your charts where price has previously struggled to break through.

14

Breakouts are some of the best trades but also can be some of the most difficult. I have a few tips that help me. First, I only trade breakouts from a strong area of support or resistance. Your chances are much better if you don’t try to trade a breakout when there is little volume. Breakouts will sometimes turn around and retest the area it just came from so, I prefer to take those trade after the test. You will miss some but you are less likely to get fooled. I hope this helps.

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15

Thanks for the tips! I completely agree—trading breakouts from strong support or resistance areas and waiting for a retest can definitely improve success. Your advice is very helpful!

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