Types of Breakouts?

[AllanXT]

Skim

Sorry Skim, but I think it's you that has the wrong end of the stick (or should that be bar?). A correction and a breakout are 2 very different phenomena.

...then we would expect you to be able to define the difference between a breakout and a counter trend move.

I'm just a junior, but I think you are going overboard on Skim. He is really trying to help me and I appreciate it. He pointed out 3 examples of what a "Newbie" like myself could interpret as 3 different types of breakouts. From reading the "No Indicators" thread, he obviously knows what he is doing. Could you instead, offer another type of breakout that is not already on the list?

thanks for you posts,

Allan

 

[TheBramble]

Socrates, when you've spent a bit more time on these boards you'll learn that threads don't always run true to their initial posting or indeed - the forum under which they are sometimes posted.

As to deciding who is capable of understanding what and who is best placed to make that decision - I don't think this medium presents the best prospect for success in those areas.

As a rookie to these boards yourself I'm sure you'll find, in time, that we are all best placed to take what we can, when we can from wherever we can as best suits our needs and knowledge at that specific point in time.

 

[Skimbleshanks]

I see you've ordered the Bulkowski book - when you get it, you'll see that there are 47 patterns detailed together with enough statistical stuff on each to send you up the wall. There's no way you can understand and trade all 47 of them right now, so you'll need to take just one and understand how and where it forms in the market, and how to tell the difference between a good one and a not-so-good one. Quite how you do that is up to you, but you'll probably find that using indicators in conjunction with patterns will confuse you even more. This will start you on the road to understanding the way the market moves, and once you understand that you'll find that a lot of the other patterns fit neatly into place. Do remember that trading takes time to learn and understand.

 

[AllanXT]

There's no way you can understand and trade all 47 of them right now, so you'll need to take just one and understand how and where it forms in the market, and how to tell the difference between a good one and a not-so-good one.

but you'll probably find that using indicators in conjunction with patterns will confuse you even more.

This will start you on the road to understanding the way the market moves, and once you understand that you'll find that a lot of the other patterns fit neatly into
place. Do remember that trading takes time to learn and understand.

You have offered some great advice here and I appreciate that. I think your viewpoint is to not use indicators but rather use the chart patterns and learn how the market moves and how the all the patterns fit in to those movements.

If I come across any more breakout types I will add them to the list. Breakouts form from areas of confustion and congestion. That seems to be an important factor that you are all expressing.

thanks and good trading

Allan

 

[SOCRATES]

Including this, one presumes?

My advice to you is as follows:
Don't gaze, or see, or daydream, use your eyes to look ! Use your eyes properly , as this
profession demands of all of us, in order for you to arrive at the correct conclusions as a result of accurate observation, see below again:~

 

[SOCRATES]

A breakout doesn't 'fail' or 'succeed'. It just is - by simple virtue of the fact that it already exists!

And your assertion that it "may fail either if there is no response to it " has no meaning.

What would be a response to any market move? A continuation? A reversal? A sideways movement? They're all 'responses' if you wish to call them that.

And as for "into an area of previous congestion leading to a repetition of the problem" what 'problem' exactly is it you're referring to? Congestion is congestion - not a problem.

To follow from the above:~

I can show you the correct route to follow in your thinking, but I cannot think for you as well.

I cannot and will not do the work for you, even if I wanted to, because I am not you.

The solution is not difficult, if YOU can logically deduce and reason.

YOU have to apply reasoning and judgement, as a result of careful observation.

These four examples you query help to define the difference between, gazing, seeing,
looking ~ which is what you are doing.......inadvertently through habit perhaps,
on the one hand - but on the other hand "observing" ~ Constructive Observation, THAT
is what is required.

It is YOU who has to do the Constructive Observation in order to arrive at conclusions.

The onus is therefore upon you to do it , not me.

 

[BBB]

AllanXT:

1/ Research on who market makers are and what they do. You'll find some stuff on these boards and on the internet. Google??
2/ Look at VSEA on monday. Look at the daily chart. You will see there was a small consolidation. I had bids and offers on both sides of the daily consolidation. I was filled as it brokeout to the downside on Monday. A daily trader would probably have lost money here, or at least in the hole if still holding, but as I was trading a shorter time frame, I still made a small profit as I got out realising $ was coming back. Today I will try to short this again below Mondays low. Unlikely, but if it happens it could come good.
3/ Again, do some more research. Read Socrates post again.

 

[TheBramble]

Socrates

I don't know my friend. I thought from a couple of your posts you were on the verge of actually saying something important. Please don't think I'm being rude, but you're not actually saying anything worth saying. Though of course, you could counter with some other Sphinx like statement explaining why that is my problem rather than yours.

It seems that you're more intent on giving an impression of great knowledge than actually displaying any.

I 'enjoyed' the benefits of a Jesuit education during my formative years and always held in high regard those 'learned' geniuses that spoke the way you write. It was only in later years did I realise that their 'distinguished countenance' was merely a mask for their deeper fears and issues of self-esteem and self-worth. I'm not saying you suffer from any of these problems - merely that your style is similar to those who do.

I quite understand how others may find your Socratic style of discourse condescending and sometimes pompous. That you are merely following what you to believe to be Socratic form is however your choice. You must be quite well aware already that this may draw such conclusions from others.

I believe you have fallen into the classic trap of allowing what useful content there is in what you say to be drowned out by over attentiveness to the form. And I have a very real sense you do know something of the markets. So this is a great pity.

As much as I have enjoyed our little exchanges, I suspect there are more than a few on this thread who now find them faintly tedious. So if you wish to develop further any of these issues I have raised please do so with me directly via PM.

 

[Quercus]

Well said, Bramble!

 

[AllanXT]

AllanXT:

1/ Research on who market makers are and what they do. You'll find some stuff on these boards and on the internet. Google??
2/ Look at VSEA on monday. Look at the daily chart. You will see there was a small consolidation. I had bids and offers on both sides of the daily consolidation. I was filled as it brokeout to the downside on Monday. A daily trader would probably have lost money here, or at least in the hole if still holding, but as I was trading a shorter time frame, I still made a small profit as I got out realising $ was coming back. Today I will try to short this again below Mondays low. Unlikely, but if it happens it could come good.
3/ Again, do some more research. Read Socrates post again.

Market makers tend to focus on the pivot point and trade around that.

With your description of VESA, it seems similar to playing an opening range breakout where you will put buystop and sellstop orders at both sides and take the one that is filled. It appears you found a consolidation area and then played both sides for the break to occur.

Is this correct? Where should I focus my research on?

thanks,

Allan

 

[BBB]

You're research should focus on charts. What kind of moves would you be able to profit from given your account size and preferred time frame, tolerance etc? what tends to happen in terms of characteristics before a profitable trade and an unprofitable trade. Whats volatility like? Unfortunately, for you this is going to take a lot of work. Reading these boards is only a start. You've got to find what works for you, and what you are happy with, regardless of what others tell you. This will take longer than you are hoping for.

Market Makers do a lot more than trade around pivots. Pivot Points as you call them are infact areas of support and resistance used by floor (pit) traders as a mental reference point. They are used by locals - who are similar but not the same as a market maker in a stock market. They are not much use for 2 reasons 1/ Everyone knows about them, 2/ Pit traded contracts are dying.

Unless you're scalping, you may not need to know what the market maker does at the moment. Nice to know but not essential. Concentrate on the charts for now, and take EVERYTHING you read ANYWHERE with a pinch of salt.

The only tip I will give you here to help you on the way is to look at reversal bars (eg the red candle after 3 or more white ones) What happens after one of these happens. How regular is this? How can you profit when you see one?

 

[AllanXT]

Excellent

You're research should focus on charts. What kind of moves would you be able to profit from given your account size and preferred time frame, tolerance etc? what tends to happen in terms of characteristics before a profitable trade and an unprofitable trade. Whats volatility like? Unfortunately, for you this is going to take a lot of work. Reading these boards is only a start. You've got to find what works for you, and what you are happy with, regardless of what others tell you. This will take longer than you are hoping for.

Market Makers do a lot more than trade around pivots. Pivot Points as you call them are infact areas of support and resistance used by floor (pit) traders as a mental reference point. They are used by locals - who are similar but not the same as a market maker in a stock market. They are not much use for 2 reasons 1/ Everyone knows about them, 2/ Pit traded contracts are dying.

Unless you're scalping, you may not need to know what the market maker does at the moment. Nice to know but not essential. Concentrate on the charts for now, and take EVERYTHING you read ANYWHERE with a pinch of salt.

The only tip I will give you here to help you on the way is to look at reversal bars (eg the red candle after 3 or more white ones) What happens after one of these happens. How regular is this? How can you profit when you see one?

Now that's what I call a most helpful post. Very good information that I can put to use. Study the charts and focus on what happens before major events such as reversals. No indicators, no books, just study the individual price moves on a chart. Cool. Simple and to the point. I like that.

Greatly appreciated.

Allan

 

[dolton]

My advice to you is as follows:
Don't gaze, or see, or daydream, use your eyes to look ! Use your eyes properly , as this
profession demands of all of us, in order for you to arrive at the correct conclusions as a result of accurate observation, see below again:~

Ho Hum........a "Profession" eh!............on balance I suppose its a cool word for gambling and anyway it sounds better than punter.

 

[SOCRATES]

Dolton,
If you go to a casino, and you enter the gaming rooms, where there is roulette, chemin de fer, blackjack, being played and you observe carefully, you will see the following:~

You will see that there are no windows and no clocks and no mirrors on the wall.

You will see that there are a lot of people wandering around the tables with their hands in their pockets,
because they have lost their money, but are still emotionally attached to the action and the place.

You will see a lot of "punters" as you call them betting on the tables, the great majority of them,
on balance, lose, because the system is not there for their benefit.

You will not see queues of "punters" at the tills waiting to be paid their winnings. You will notice that
there are some, but the queues of "punters" buying chips is greater always than the queue of "punters"
waiting to cash their chips.

But you will see that among all this pain and failure and excitement mixed together, there are a small
group of individuals that are not affected by all these conflicting emotions. They are the pit bosses,
the croupiers, and the inspectors. They remain aloof, nonplussed.

These are people pursuing a profession. All the others present are not. They have cultivated a totally different mindset. But they are all looking at the same things, in the same venue, at the same time. In gaming, the casino always has the edge, because the outcomes are driven by chance, except in cases of hardened card counters, who if discovered are thrown out.

In trading the outcomes are not driven by chance, and when you crack it you are not thrown out. Instead you are allowed to stay, and to repeat the excercise without forcing as often as market conditions will allow you to, as and when. That is the difference.

The original discussion on breakouts is for the benefit of beginners, who must not be either misdirected or overloaded. That is why I am not taking this higher, not because I cannot but because I will not. And this is for the benefit of our friend Bramble as well, who keeps on prodding. If at a very basic mechanical level it is already not understood, let alone mastered, it cannot be elaborated upon. That's it.

 

[SOCRATES]

And by the way, someone earlier on this thread made an enquiry about gaps.

There are 3 types of gaps:~

Going North: Breakaway Gaps, Continuation Gaps, Exhaustion Gaps, qualified by Overheating, Stock Shortage, Excessive Demand, or appropriate combination thereof.

Going South: The same but inverted, qualified by Overcooling, Stock Surplus, Excessive Supply.

In conditions of Overheating there is said to be no ceiling.

In conditions of Overcooling there is said to be no floor.

 

[TheBramble]

Allan, stumbled across this definition/explanation which I thought may be of general interest (re: Breakouts) rather than adding specifically to your current list.

http://tradingday.com/c/tatuto/recognizingfalsebreakoutsandwhipsaws.html

 

[dolton]

Dolton,
If you go to a casino, and you enter the gaming rooms, where there is roulette, chemin de fer, blackjack, being played and you observe carefully, you will see the following:~

You will see that there are no windows and no clocks and no mirrors on the wall.

You will see that there are a lot of people wandering around the tables with their hands in their pockets, because they have lost their money, but are still emotionally attached to the action and the place.

You will see a lot of "punters" as you call them betting on the tables, the great majority of them, on balance, lose, because the system is not there for their benefit.

There is a sub-set of traders who deal exclusively with SB's who by common acceptance are bookies...................punters use bookies. QED

 

[neil]

There is a sub-set of traders who deal exclusively with SB's who by common acceptance are bookies...................punters use bookies. QED

And the other traders - are they punters?

Is that how you trade - by punting or gambling?

 

[SOCRATES]

That is right Neil, the majority of people who are prevented from understanding how all this is made to work have the opinion that markets are like some sort of casino, and that participants are like gamblers.

 

[dolton]

And the other traders - are they punters?

Is that how you trade - by punting or gambling?

I did say a "sub-set" of traders....ie not all traders..............

How do I trade? is that important for you to know this, I am making a general comment nothing personal old boy!!