Breakout Strategy Help

Hello,

I enjoy trading resistance and supports breakout.

I am trying to put together a simple support and resistance breakout strategy to back test and record the right data in my spreadsheet to analyze after some manual back testing.

My questions is:

After a failed breakout (for a loss or breakeven), what type of data can I collect to determine when to re-enter the level (Support or Resistance)?

The first arrow, I would enter as price breaks resistance. The second arrow, i always hesitate to enter. I enter on the 2nd arrow because price has touched some support.

Please see attachment.

 

Breakout strategy in itself yields poor results unless you qualify it with a catalyst. There are a ton of 'noise' breakouts day to day but end up mean reverting since catalyst wasn't present for price to achieve 'escape velocity'..

Look at Oil, everyone playing breakout got killed on both sides. The hedgers can't resist locking price sales at 55..

 

The markets are broken to a point that only unlimited fund entities such as nation states can dictate 'escape velocity' of macro derivatives.

 

Thanks Spectre2007

I appreciate your response.

 

There are some assumptions about what Ren Tec is doing, instead of looking at price as just 5 parameters (high,open,close,low,time interval), they associate it with 20 or more parameters in real time.

The indication to buy at the next cross of resistance without looking at the context of that cross in time, would be like flying blind.

When do breaks of previous day highs or lows leads to a true breakout. Analyze all the definable parameters, and the answer will be the cross in context of condition a,b,c.... so eventually the machine will only buy or sell when proper conditions exist.

Chris

 

Well said.

 

Thanks Spectre2007 for comments.

 

input priceLS = 2242.5;
input price = close;
input priceEM = low;
input fastLength = 180;
input slowLength = 200;
input averageType = AverageType.EXPONENTIAL;

plot FastMA = MovingAverage(averageType.EXPONENTIAL, priceEM, fastLength);
plot SlowMA = MovingAverage(averageType.EXPONENTIAL, priceEM, slowLength);

FastMA.SetDefaultColor(GetColor(1));
SlowMA.SetDefaultColor(GetColor(2));

AddOrder(OrderType.BUY_AUTO, price crosses above priceLS, tickColor = GetColor(1), arrowColor = GetColor(1), name = "PriceLSStratLE");
AddOrder(OrderType.SELL_AUTO, price crosses below priceLS, tickColor = GetColor(2), arrowColor = GetColor(2), name = "PriceLSStratSE");
AddOrder(OrderType.BUY_AUTO, no);