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How do YOU enter breakouts?

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SammyD View Post
Good perspectives. I guess I'm never really positioned before volatility because I don't trade consolidating markets since I don't have an idea which way they will move. Also, the question about the term breakout is valid. I guess where I am having real trouble deciding to get in is when the market is moving quickly in one direction without much pullback such as yesterday's spike (see attachment). There really wasn't much of a pullback until much higher but as the spike is forming how would I know to get in? Also, from my perspective, spikes tend to create a worse risk to reward ratio as the stop loss must be placed much further back.

I have attached a smaller time frame view of the move up you are referencing. You just can't trade volatility like that with a 15 minute chart hoping for a pullback. So, if you want in on that, zoom way in. Otherwise, just stay out.

This was unexpected ECB-related news, and I'm not so sure I would have been positioned long anyway given the context. But you see the first pop (around 2145) and that's your real opportunity. Stops needn't be larger than 10 ticks or so with this type of trade. It pops, it consolidates, and then it will either continue, or come back down. It could have come back down and you would have stopped out, but it's a manageable loss. You are trading momentum, so don't give it room. If it pulls way back, then people will not pay up, and you will not have the move you are looking for.

But even though your best opportunity was early (of course), look at all the minor rotations on the way up. There's your opportunities if you choose to enter, but given the vertical nature of this, no reason to give it more than 10 or 12 ticks on any of them. For action like this, hold your breath and jump in, with quantified risk. Easier said than done, particularly in volatile situations. Just don't do anything stupid (like continuing to buy if it continues to pull back further and further) and it's all good.

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How do YOU enter breakouts?-euro.png  
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