Hi all,
another quick question: is break through and retest strategy more profitable than break through alone? thanks.
regards,
f
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Itâs better to wait for a retest. This gives you a better chance at avoiding a fake break.
The op has asked a great question. The correct answer has yet to be supplied in this threadâŚ
Then letâs hear the âcorrectâ answerâŚ
There are only two choices silly
Statistics show that a fake break is more common than a breakout, silly 
There is a strategy for both, so in a move up, you can buy the breakout and hope itâs not a fake, or you can sell the breakout and hope it reverses. OR, you can wait for confirmation in the form of a retest.
Saying that, the strategy itself is subjective, based on where youâre drawing your lines/zones and whether youâre trading SR, SD, or candle patterns. Traders see these areas differently.
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Both strategies can be profitable. Like most strategies in trading, most of them can be made to be profitable as long as they are managed with rules consistent to the strategy itself.
In this case, the question reflects the eternal dilemma between taking the early opportunity and waiting for confirmation. The earlier you make your move the more likely it is to be incorrect: but the potential distance for price to travel is greater. If you wait for confirmation your entry is more likely to be successful, but this will be at the cost of a later entry and some opportunities will be missed altogether.
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hi tommor, thanks for your answer. it might be trade off between success rate and profit / loss per trade. i am not sure who has done such analysis to show the results statistically, ie comparing the two different strategies and show 1) the total number of winning trades 2) the total amount of winnings 3) the total number of losing trades 4) the total amount of loss. happy to hear your thoughts. regards, f
hi mattymoney, thanks for your answer. would you like to share the statistics which you mentioned in the answer? âstatistics shows that a fake break is more common than a breakoutâ. i think this is exactly what i will ask in the next step, i.e. statistics of both winning and losing trades in both strategies. cheers! happy to hear your thoughts again. f
I think in practice there are just too many variables to make someoneâs statistics on such things reliable. There are no short-cuts to a precise winning strategy but if you follow the respected principles of general techniques risk management, position size, set-up criteria, trade journaling etc. you should be profitable.
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hi mattymoney, thanks for the answer. i am considering break out and re-test strategies. indeed this might avoid a fake break out. what i am hearing is that volume is a critical matter to consider when looking at break out / re-test, etc - establishing trend require a larger trade volume presume that the volume which you are looking at is indeed the market trade volume not the trade volume within your brokerage. how would you like to consider the trade volume when your approach the break out and re-test strategy? many thanks. f
thanks tommor for shareing your thoughts. in addition to the price patterns, how would you like to factor in the volume factor in the break out and re-test? happy to hear your thoughts. f
Iâm not sure there is such a thing as accurate and comprehensive volume data in forex.
Some people say it has a place in company stock trading, where shares changing hands are continuously declared. But even when I was trading shares, the most I ever got from volume was that when price moved strongly up or down, volume was high: and when price was flat, volume was flat. So I gave up on volume.
thanks tommor for sharing. can i explore here? if you give up volume, what would you like to use to confirm the break out and / or re-test? many thanks. f
For my long-term trend-following trades I am looking for the recovery from a pull-back. For example in an uptrend on D1, a pull-back means 2 consecutive days with lower highs and lower lows, followed by a day which breaches the high of the second day.
Here is my take on SR levels on a 1H chart. Buy on confirmation (candle close) above zone, sell below zone:
As for volume, I donât use it because it doesnât make sense to me. Maybe I just donât understand it, but I see the same thing Tommor does:
But some people swear by it. I had someone go into detail about reading volume around SR levels on my thread starting here: volume info.
Hope this helps. But just remember, everyone seeâs SR levels and zones differently. Some include wicks, some donât. But with some experience youâll figure out what works best for you.
***Edit - addition: I believe the higher timeframes, such as 4H and 1D are more reliable when using this strategy.
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I tend to wait for a confirmation that breakthrough is not fake so retest of the level that was broken and subsequent bounce from it lends credence to the buyer intention to move to a new high.
In my opinion waiting for the retest is better. Better confirmation, better risk/reward
someone is confused⌠the ops excellent question is very specific. the correct answer should include a mathematical reason. trading is a numbers game, those who understand the underlying math behind their choices make more money.
most are too lazy to go into depth with the math, ive had some brilliant people on my team but i will take a hard worker over a genius all day
being good at math does not mean you know what the most mathematically optimal set of system rules are. sometimes say you know what im not too sure, let me get back to you, sometimes thats better than talking like you know everything when you dont
it takes deep thought and research to answer this question so until youve done both please drop the act