Box breakout trading

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15 min tlb

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15 min tlb said:
Trade Forex With A Directional Strategy

Breakout Definition | Investopedia

Trading System Development:
Trading the Opening Range Breakouts

http://www.wpi.edu/Pubs/E-project/A...910-142422/unrestricted/Veselin_Iliev_IQP.pdf

Volatility Breakout Systems By Linda Bradford Raschke - Traders Log

http://www.trade2win.com/boards/forex/31855-phil-newtons-range-break-out-strategy.html

Which breakout system is best to trade?
Click to expand...

The top one imo. This would be classed as a triple top buy signal within P&F and is the strongest signal. Gives me some great results
 
3 Reasons Not To Trade Range Breakouts

3 Reasons Not To Trade Range Breakouts

For most novice traders, trading range breakouts will be a losing strategy: false breakouts will result in losses, corrections will fake traders out of legitimate moves, and explosive gains are rare considering the many potential ranges available to trade.

Some scammers wrote books on box breakouts and novices blew their accounts on many forums , by following these book/authoring scammers.

http://www.tradetrek.com/education/tech_tra/tech_trading_strategy04.asp
 
15 min tlb said:
For most novice traders, trading range breakouts will be a losing strategy: false breakouts will result in losses, corrections will fake traders out of legitimate moves, and explosive gains are rare considering the many potential ranges available to trade.
Click to expand...
Hi 15 min tlb,
You may well be right, but not because there's anything inherently wrong in trading a range breakout strategy.

Essentially, there really are only three basic trading styles or strategies available to any trader. It makes little difference whether one is trading a discretionary or mechanical method and, if the former, whether one trades with indicators or a price only 'naked trading' type of methodology. The reason being that if a trader uses a TA based methodology, then pretty much all the recognized ones are derivatives of these three basic approaches: retracements, reversals and breakouts (as explained in the FAQ linked above). With very few exceptions, any strategy that doesn't fit into one of the above will, likely as not, be based on a non-TA approach (e.g. HFT algo' based mechanical strategies). Even then, if one looks at a chart showing the entries and exits of such approaches, chances are that the entry will either be designed to join an established trend (i.e. trend continuation) or be designed to pick tops or bottoms - or breakouts into blue sky territory. These can either be at the extreme ranges of a trend, pullbacks within a longer term trend or tops and bottoms within a trading range or period of consolidation. Basically, those are the only choices available to any trader. It makes little difference what their approach is. It can be TA based or fundamentally based. It can involve the moon and the stars and all manner of hocus pocus or it can be based on Nobel prize winning scientific logic. It matters not.

At the end of the day, all the above have a potential for both profit and loss. As far as I'm aware, there's no evidence to suggest that any one of them is any more or less profitable than another. Ultimately, success or failure, profit or loss, is down to each individual trader. It doesn't mean that any one approach is better or worse than another or that one is more or less likely to result in profit (or loss) than another.

Just my humble opinion - not official T2W policy!
:)
Tim.
 
I have found that trading false breakouts gets better results. The price movement is usually less erratic. There aren't any explosive gains but the small wins are a little more consistent. It's easy to miss a good breakout if price runs away quickly but not so with false breakouts.

Peter
 
15 min tlb said:
Which breakout system is best to trade?
Click to expand...

When trading break outs, I like to check the momentum, higher time frames, pa before that range, correlated markets, fundamentals etc. Also I need to follow that market for some time to get to know the price behaviour - e.g. for some markets few touches often lead to break outs and for some they don't etc. etc.

PS Most of the articles are written by non-traders and may not be the right way to learn how to trade break outs profitably. Trial and error - very good way if one can afford to pay for all the lessons.
 
I do like to trade breakouts thought it is only one of the strategy I am using. There are many possible ways to establish the parameters as to what constitutes the bottom and top "borders" from which the PA either breaks through and continues in the direction of the trend of a higher TF or goes against it.
Below are just some examples that I have been using for some time:

Mark US close and add some 15 to 25 pips on either side of the ATR crating a box, the advantage of this approach is that I can pre-set trades in the evening, many of them are triggered during the Asian session. I go for 20 pips pt against the trade on H4 , and a much larger PT in the direction of the trend on H4.

Another approach is to trade breakouts from the bottom and top of the last Asian session if that session produced less then 50% of the ATR of the last 3 or 5 trading days

Then there is a simple observation of the price consolidation, itself creating a "box" at any time and on any TF, this box can be drawn manually, or it can be drawn by an indicator following your instructions in the given set up.

There is also break out from the previous daily/ weekly range too.

With this break out approaches one cannot be too greedy and take profits when they come, remembering that the momentum is likely to carry on for a while before retracing, even when trading against the trend.

The positive side of trading this approaches is that there are clearly indicated entry points allowing to pre-set trades, a much better practice than just getting into the trade on a spare of the moment. SL levels are also easier to calculate.

Wishing all to have a good trading week,
2be
 
Today's box breakout fiasco:mad:
 

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15 min tlb said:
Today's box breakout fiasco:mad:
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Yeah, today was not a good day for breakout trading, but trading the false breakouts would have made nice money. Even so, a good trader would not have taken every breakout instance shown on your chart. After 2 consecutive losses it's time to realize today may not be the right day for that. Either save your money for another day or try a different strategy. I don't recommend trading the opposite way because you can get whipsawed trying to chase the market.

Peter
 
look for breakouts with trending markets , ma crosses and breakouts with higher time frame trends.

looking for filters may help

a)The second breakout is a confirmation sign of market intent , two false breakouts is rare.

b)new trending breakouts with hh or ll tend to be in tune with markets

c) following underlying and preceding trend

d) backed with fundamental price drivers

e) Bounce off (rejection)previous resistance / now support breakout

f) momentum breakouts

g) no divergence on stochastic on 15,30 and 240 min

h)channel breakouts in trending markets

i) keep out of ranging zones

j)avoid random noise and randomness which give appearance of set ups.

http://www.trade2win.com/boards/general-trading-chat/107060-how-avoid-false-breakouts.html
 
timsk said:
Hi 15 min tlb,

At the end of the day, all the above have a potential for both profit and loss. As far as I'm aware, there's no evidence to suggest that any one of them is any more or less profitable than another. Ultimately, success or failure, profit or loss, is down to each individual trader. It doesn't mean that any one approach is better or worse than another or that one is more or less likely to result in profit (or loss) than another.

Just my humble opinion - not official T2W policy!
:)
Tim.
Click to expand...

I must say you have a good article here

http://www.trade2win.com/boards/tra...-should-use-where-can-i-find.html#post1246148

Why TA ‘fails’,It's traders that are profitable – not their methodologies ,

Why TA ‘fails’
To develop a methodology with a success rate of 65% or better, you must find ways to filter out the false signals. One way to do this is to look beyond charts, candlesticks and indicators and try to gauge market sentiment. Bearish sentiment will favour the reversal trader looking to short a double top, while bullish sentiment will favour the breakout trader looking to go long upon a breakout to fresh highs. The trader who is able to accurately and repeatedly gauge a confluence of chart pattern and market sentiment, stands a much better chance of long term success that a trader who lacks such skills.

Another way to filter out false signals is to look at the overall context in which they appear. To focus on chart patterns in isolation without looking at the big picture will, almost inevtably, reduce the success ratio of proftable trades to unprofitable ones. For more info' on this with examples, please read the FAQ: What Triggers do you use to Enter a Trade?
 
When the moving averages are up or 4 hour trend lines are in place , trade the inside bar (range)breakout.
 

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today's box breakout trades.The 1 hour version.
 

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