How to Avoid False Breakouts?

[foroom lluzers]

No, as I said in 2010, there is no method that eliminates a significant proportion of false break-outs.

We've been over this. What's the point of exhuming an old thread from 2010 to beat the same drum?

It is not beating the same drum .Maybe the wiseman told you there is and you will argue with him.Maybe you need to beat that drum.

Try longer time frames trading backed by fundamental price movers , like changes in interest rates expectations or Trump's expected tax reductions for stocks and stock investments , along with Warren buffet thinking.

Introduce patience in entries and exits , so overrall there will be fewer higher quality entries.

 

[foroom lluzers]

This might just be me, but I looked very hard for a consistently profitable (i.e. over 5-10 years) mechanical retracement system when backtesting and I couldn't find one. Not to say it can't be done in a discretionary way, of course. (or maybe I didn't look hard enough)

Market is not driven by maths figures , market is driven by humans with super human insights , every moment in the market is unique.

Markets are driven by different fundamental incidents ,over the back test periods.
Did you back test them?

 

[gerryg]

Market is not driven by maths figures , market is driven by humans with super human insights , every moment in the market is unique.

Markets are driven by different fundamental incidents ,over the back test periods.
Did you back test them?

You are telling this as if you don't know there are thousands of hedge funds running algos with mathematically calculated edge. Can't believe humans do really play crucial part in this super-fast game of speeds..

 

[foroom lluzers]

You are telling this as if you don't know there are thousands of hedge funds running algos with mathematically calculated edge. Can't believe humans do really play crucial part in this super-fast game of speeds..

Don't kid yourself ,hedge funds don't trade breakouts.

Nowadays they have started trading breakouts and false breakouts ,after employing people as intelligent as yourself.They know 80% of breakouts fail and transform into a range.Ranges are easy to spot, making the false breakout strategy very popular. Yet many traders lose money on this strategy, mainly because of false breakouts, corrections to the breakout point and unrealistic expectations.

 

[foroom lluzers]

Here successful breakout trades for failures of breakouts

80% of the time they fail to breakout and become trends ,resulting in losses.Markets trend about 20% of the time and spend the other 80% grinding through trading ranges, pullbacks and other counter trend action that tests boundaries.

 

[foroom lluzers]