if there is an uptrend making higher highs and lows, when a new high is made (breakout of previous peak), can we go on? from my little experience of stocks, i know they do this. otherwise our entries seem limited to only pullback variations which can stop us from getting into good setups that could be currently running (and might miss it if it breaks up aggressively). with stocks they take these breakouts and put the stop outside the recent low (for an uptrend).
not much is mentioned on this site about this trade. would have thought it is a bread and butter trade. though they talk about breakouts in trends which occur after horizontal consolidations within trends.
The 3 ducks thread works on this principle, finding trends, confirming the thread, picking an entry point (usually a new high/low), then riding the trend.
Try it on demo if you like, I’ve found it very successful
yes, i agree, pullback entries are bread and butter, but i’m just saying that i would have thought “new high” entrances are also bread and butter, although they aren’t covered much on this site’s learning section. so i take it that new highs are bread and butter as well , and i should grab those entrances too. let me know otherwise. without them, when you miss pullbacks you’d have to wait for another pullback which limits our options.
you raised a very good question, one that can be a start for a very long discussion and topic for many arguments. In general, the answer from baz1982 is logical, still my experience shows that eddieb´s words about the new highs could be more successful. I am not here to argue with other members, just share how I see it.
I also like pullback, BUT you can also ask why is there a pullback? It might not only be a pullback but the start of a reversal. Anyway, of course there are money management methods to deal with that. Still, a new high or low is actually giving you more confirmation than a new pullback and many of the most successful trading methods were based on breakout systems.
More than that, I am not sure how many trading books you have read about the best traders in history. Livermore says “buy new highs and sell new lows”. Williams says “if you are waiting for the pullbacks, many time you will just miss the whole moves as the best trades do not give much chance to re-enter in a pullback”. In both case the meaning is important, I used my own words with what they said.
I also advice you to try it on demo (whatever you choose to do)
Don’t get me wrong guys, there are times that I’ll trade a new high/low but the original post specifically stated that it was a trending market. Yes, a pull-back could turn in to a reversal but if the market is trending, then you should be making the most of it & maximising your opportunities.
The analogy of price being a train always does it for me. As the price breaks the high, it’s moving in the right direction but it’s not stopping for you to get onboard so it’s riskier jumping on board a moving train than it is waiting at the station (a pull-back) in order to get on board the trend-train.
It’s all dependent on you strategy though, a small pull back to an EMA on a lower TF would get you in the market in-line with the trend sooner than waiting for a retracement to S/R on a higher TF. However each to their own, if it works & is profitable then keep doing it (try the odd tweak though to maximise efficiency).
[QUOTE=“harpoon;737422”]<img src=“301 Moved Permanently”/> see this pic just to make sure we are on the same idea (was fun using paint brush)… the candle isn’t massive (price doesn’t run away as such). i find it interesting that this may not be a basic setup. might try some books to see what they say.[/QUOTE]
I know it’s just a rough sketch but your low is in line with a previous high so if you went to a lower TF & watched that level, you could use price action at the support to get in to a trade with a far smaller stop thus increasing your R:R.
You could take some profit at the high (in the event of a bounce) & let the rest ride with either a trailing stop or a projected extension TP.
as u say you could get in earlier at the support level, but if you’re not there in time you can miss a great trend (it may run fast), unless you go in at the new high . they do that with stocks and it gives another opportunity to enter. actually , it is done here too on the learning site, as a new trend continuing from horizontal consolidation , but not mentioned for your typical trend as in the sketch.
“trend is not your friend” , don’t understand this. would have thought the opposite.
baz, while I’m here, you mentioned another typical setup which i didn’t know about - rebound from support to get into the trend. so i take it look for those setups with something like engulfing candles or just price moving off the level or stalling there at the lower timeframe? i’ll have to add that one to my repertoire.
