Breakout Trading
Breakout trading has been tried many time over the years by thousands of successful and not so successful trader. This system isnt any different then HANS system (which is just a replica of many breakout systems) from moneytec or numerous articles related to stock market investing that touch on the subject of breakout trading in general. Switching time frames from one breakout period to another doesnt change the strategy, its still the same. Many even use multiple time frame breakouts, like 2-4est then 4-6 est then 6-8est, etc. Or use weekyl breakouts and daily breakouts of highs and lows. Whatever shape or form it comes it, there is only on issue with breakout trading. This is determining the breakolut has actually occured. Now, since the begining the best way to do so has been to use pricing information in the form of time or pips. In this case, as in most, your using a spread of 10 pips. Some use more advanced methods such as calculating the spread between the high and low of that period and setting a breakout based upon that number. Or some use a more simpler method such as yours and just pull a number from thin air, based upon what weeds out ranging markets more often then not. Both of which are fine, but still have many flaws. The second method would be time based, for example, some will buy into the market after the market has been on a directional basis after the break for some specific time period. Any of which really rarely work in the end.
The only other method of determining (BTW this is all of the top of my head) is indicator based. Now if you do this, you are now officially changing the strategy. You are now using your breakout period as and indicator in itself when you combine it with somehting such as ADX or a momentum indicator to insure the breakout will continue. Any which way, breakout trading has again been successful for many and not so successful for many more.
Essentially, the people you would probably want to hear from most would be pivot traders. They trade in a similar fashion with S/R lines and such. Most systems based around pivots use similar indicators as above. Bubble might want to comment on this.
In closing, again this is just another breakout modifiction. Changing time frames never changes the actuall strat. The HANS thread on moneytec/strategybuilder has 100+ pages to go thru if your interested. Most is rubbish rambling but then there is some interesting recommendations. Maybe it can be filtered through and then actually put to good use on this thread.
Just to make it clear, im not aginst breakout trading at all. Its interesting but unfortuanetly, usually requires a very large SL. In come cases 50 - 100 pips. Not the way I prefer trading but might fit someone elses style. GOODLUCK. I will check in and see the progress.
- secXces
http://secxcesfultrading.blogspot.com/
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