I dont take overnight positions and trade on 10-min breakout and breakdowns. I was wondering though, what are good indicators that allow you to 'confirm' the momentum of the breakout/breakdown and what signals you guys use make these confirmations. Thanks.
arzoo, When you say 10-min breakout/breakdowns... do you mean your using a 10min interval chart or do you mean your using a Range BreakOut/BreakDown to look for trade setups every 10mins? Also, what are you trading? As for confirmation indicators...that GREATLY depends upon your trade setup. My point is this...describe or post a chart of a particular trade setup your using and I'm sure you will get better answers to what type of confirming indicators are good for a particular type of situation that your talking about (range breakouts/breakdowns or 10min interval charts). I'll post an annotated chart in an attempt to answer your question if you can provide the above information to my questions. NihabaAshi
sorry bout that. I'll try to clarify better. I trade based on 10-min charts and take positions when small bases either breakout or breakdown. I usually just use a simple moving average to get the trend (and use it to watch out for resistance or support). But lately, I've noticed that after some breakouts or breakdowns, the issues pullback a bit and I get stopped out afterwhich the issue goes my way for a big gain. To a point, I'm kinda observing that my basis for taking positions on breakdowns and breakouts has been a bit arbitrary, depending on which issue I see among my 'candidates' although I always make sure the I have the nas on the same trend. I'm trying to figure out which indicator/s can help in order to make the percentages better in entering better trades. Thanks again.
Hi...personally, I think 10 minute bars are a little long for if you don't hold overnight anyway. To give you an example of why I say that, I'll post 2 charts. One is a 10 minute and one is a 133T. You'll see that you only have a couple of channel breakouts using the 10 minute chart and 5 potential trades in the last hour using 133T. I like to use a "Donchian Channel" (30 period) to help me see support and resistance levels. Here's the 10 minute chart:
Breakout, Sorry, what period does a 133t chart use? I gotten used to a 10-min coz I felt that there would be more false/fake moves in the shorter periods. But I think you are correct that there are more breakouts/breakdowns. In your case does this mean you take very small gains (like scalp) them quickly? Also, I've moved back from candlesticks to the usual ohlc ticks because although candles give a lot of signals, there were a lot of false ones too. Is it just me or is there a better way to weed out some of the false/fake signals? Thanks again.
The best confirmation of a breakout would be volume, and the candle pattern it took to breakout from (and those following). As for indicators, a momentum based one like CCI, RSI would be good at giving forward warning of a momentum shift with divergences. I also use a fast/slow overlayed stochastics along with several EMAs to confirm trend direction.
A 133T is just a 133 Tick chart and the channel is 30 period. Yes, I take quick profits of around $70 to $80 bucks and I try to keep my average loss around $20 bucks. The best way to weed out false signals is try to determine a trend. Takes a little practice.
Sorry it took me so long to get back to you with a reply. I had a major computer failure and took me most of the night to get back into windows so I can backup all my important data before taking it back to the repair shop. I read what breakout and prox posted and I agree with both. Basically, most traders I know use a shorter time interval for that type of breakout/breakdown scenario you described. Also, some of the indicators they describe...I myself don't use but do know other traders using them profitably. As for the continuous TICK chart...I just started playing around with them a little and can say that if I ever want to do some serious scalping...continuous TICK charts is the only way to go. I based the above on the fact that all the traders I know that are making money from scalping are using continuous TICK charts and those that are struggling at scalping are using higher time intervals like 1min, 2min or 3min charts. Note: The 1min chart could be used as a confirming interval to continuos TICK intervals. Last of all...although you didn't say you were scalping nor am I implying that those that use continuous TICK charts are scalpers... range breakout/breakdown trade setups via higher time intervals like your 10min interval... often reguires a lot of consolidation to setup properly. Thus, on a day like yesterday...a range breakout/breakdown trade setup without candlestick analysis would be tough to do on a 10min chart interval. Back to backing up my data. P.S. I decided not to post any annotated chart because those that were already posted...got to the point clearly. NihabaAshi