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Break Out of Fake Out
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Break Out of Fake Out

  #1 (permalink)
Elite Member
Nashville, Tennessee
 
Futures Experience: Intermediate
Platform: Ninja / Jigsaw / 9G
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tderrick's Avatar
 
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Break Out of Fake Out

I would like to get some other traders take on how to enter the big run.

These always generate from consolidation / sideways channel areas.

So, there I am happily scalping along a beautiful sideways channel - selling the highs and buying the lows,
when suddenly, the groove breaks and it looks like pressure to one side or the other.

Do we wait for it to break and then wait for the PB that sometimes never returns? Which also lets us
see if it is indeed a BO.

Do we enter at the best possible price after it breaks the channel and place your stop clear
at the bottom of the channel?
The same as above with some type of static stop?

...etc, etc...

This is my hardest decision in trading.


All thoughts are anxiously anticipated

I would like to know what the most popular mind set is ...

TIA !!


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #2 (permalink)
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  #3 (permalink)
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DetroitMIUSA
 
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For me if the BO does pull back to the TL or top/bottom of channel which normally it does at least in ES PA I would enter at the lowest point of the PB to go in what ever the first part of the move is however one thing to also consider on this type of entry is the momentum. Is it still there?

If it does not pull back at all on the BO I just let it run away and wait for something else. I don't like to chase when I know that in time the PA will come back and give me what I want/need for entry. Hard to get that into your Psyche however it has saved me some money now that I do it this way.

If indeed PA comes back into the channel I would short it to go back down to the bottom again if again the momentum is there. Does it make sense?

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  #4 (permalink)
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I think that it depends on the 'mood' of the market. If price is in a messy range and trading feels like wading through tar, i would be very careful about breakouts and would like to see some sort of rather clear confirmation. On the other hand, if price is in a perfect ping pong range and you can feel how pressure is building up in the market and everyone is waiting for an eruption like Krakatoa, i would likely have a stop order outside the channel waiting for that break out and hoping to perhaps catch a nice spike. I think there are (at least for me) no hard fast rules of how to trade breakouts, it is in essence context based and this context is hard to quantify....

Vvhg

Hic Rhodos, hic salta.
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  #5 (permalink)
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PowerBroker View Post
For me if the BO does pull back to the TL or top/bottom of channel which normally it does at least in ES PA I would enter at the lowest point of the PB to go in what ever the first part of the move is however one thing to also consider on this type of entry is the momentum. Is it still there?

If it does not pull back at all on the BO I just let it run away and wait for something else. I don't like to chase when I know that in time the PA will come back and give me what I want/need for entry. Hard to get that into your Psyche however it has saved me some money now that I do it this way.

If indeed PA comes back into the channel I would short it to go back down to the bottom again if again the momentum is there. Does it make sense?


One of my biggest emotional issues is price running away without me - especially as I can usually see the
pressure forming, now that I have accrued enough screen time.

I am getting better at this, however. It is much safer to wait for the correction and work with more
sane sized bars (5 / 15 min in my case).

If I can't catch it just as it breaks, or from somewhere within the consolidation channel. I try to
make myself wait for a decent PB to a MA. This is still tricky for me though

thanks for the help..


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #6 (permalink)
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vvhg View Post
I think that it depends on the 'mood' of the market. If price is in a messy range and trading feels like wading through tar, i would be very careful about breakouts and would like to see some sort of rather clear confirmation. On the other hand, if price is in a perfect ping pong range and you can feel how pressure is building up in the market and everyone is waiting for an eruption like Krakatoa, i would likely have a stop order outside the channel waiting for that break out and hoping to perhaps catch a nice spike. I think there are (at least for me) no hard fast rules of how to trade breakouts, it is in essence context based and this context is hard to quantify....

Vvhg


Indeed, BO's appear to be all about how the genesis channel is behaving leading up to the
evil deed.

...all about feel.... I love it.

I am learning what a real 6E breakout "looks like". The RR is usually worth just diving in with a
10 tick stop or so and looking for at least 40 ticks or the nearest SR.

thanks for the insight


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #7 (permalink)
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DetroitMIUSA
 
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Here is a pearl of wisdom that was told to me which I will now pass on cuz I am leaving here.

The market is ALWAYS going to be there. LET the BO run away. It's going to be back! AGAIN and AGAIN. Eventually you WILL get it. There WILL always be another set up coming. Just wait for the market to give you what YOU want.

Patience was one of the hardest things for me to learn. Admittedly I am Still working on it!!

Everyday is a chance for a new beginning!

Trade smart OR JUST DON'T TRADE...

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  #8 (permalink)
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AJ,

I have a loose guideline,

On shorts, I try to take the break down. For some reason, once a break down occurs, the rounded top most short moves originate from have already occurred. Shorts get killed in the rounding top process unless your stop is well above the noise. You and I know price almost always goes down faster than up (unless its gas prices ) and you rarely get a good pull back. The first spike is usually good for some number of ticks....

For longs, I usually try to wait for the pull back. For some reason, I expect gravity to work against the longs.....In any event, if it runs without me, I'm ok with that, just wait for the next one. They always come.

Being ok with the uncertain nature of trading and knowing in advance you will miss some is the key to releasing that emotional distress we have with "missing" the move. That distress causes us to chase. But you didn't miss the move, you made a conscious decision to pass either from fear or uncertainty about the set up. Therefore, you must accept responsibility for the decision and have the patience to wait for the next one.

Its either that or take 100% of the breakouts you see setting up and to also take responsibility for the results. If you are going to be discretionary, then the results will be random, unless you take them all.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #9 (permalink)
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PowerBroker View Post
Here is a pearl of wisdom that was told to me which I will now pass on cuz I am leaving here.

The market is ALWAYS going to be there. LET the BO run away. It's going to be back! AGAIN and AGAIN. Eventually you WILL get it. There WILL always be another set up coming. Just wait for the market to give you what YOU want.

Patience was one of the hardest things for me to learn. Admittedly I am Still working on it!!

Everyday is a chance for a new beginning!

Trade smart OR JUST DON'T TRADE...


Damn, that was a 7 for one pearl deal!!!

I will post that at the top of my 6E notepad file I study before taking my first trade each morning.
Rules, news, moving times and great quotes like the ones you mentioned.

Please don't stay away long, at least check in on my progress from time to time

Thanks


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #10 (permalink)
Elite Member
Nashville, Tennessee
 
Futures Experience: Intermediate
Platform: Ninja / Jigsaw / 9G
Broker/Data: AMP / CQG
Favorite Futures: NQ, YM and ES
 
tderrick's Avatar
 
Posts: 1,589 since Sep 2010
Thanks: 4,260 given, 2,527 received



PandaWarrior View Post
AJ,

I have a loose guideline,

On shorts, I try to take the break down. For some reason, once a break down occurs, the rounded top most short moves originate from have already occurred. Shorts get killed in the rounding top process unless your stop is well above the noise. You and I know price almost always goes down faster than up (unless its gas prices ) and you rarely get a good pull back. The first spike is usually good for some number of ticks....

For longs, I usually try to wait for the pull back. For some reason, I expect gravity to work against the longs.....In any event, if it runs without me, I'm ok with that, just wait for the next one. They always come.

Being ok with the uncertain nature of trading and knowing in advance you will miss some is the key to releasing that emotional distress we have with "missing" the move. That distress causes us to chase. But you didn't miss the move, you made a conscious decision to pass either from fear or uncertainty about the set up. Therefore, you must accept responsibility for the decision and have the patience to wait for the next one.

Its either that or take 100% of the breakouts you see setting up and to also take responsibility for the results. If you are going to be discretionary, then the results will be random, unless you take them all.



Wise, as always, my friend


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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