The markets may not be perfectly random, but as you just described, they are random enough that most trading methodologies aren't going to work.
sorry to hear that. IMHO, the reason most breakouts don't work is that most of them happen after the market already participated or positioned itself for that break and new orders are not coming in... however, sudden breakouts sometimes work, especially from narrow ranges, and that is also because orders, but because they are massively placed above and below the range. (about sudden breakouts I would kindly suggest to whomever is interested that he/she looks over tom demark trendlines and breakout qualifiers which are essential for identifying breakouts that will attract further participation vs. breakouts that are a reason of already heavy participation) That is also the reason of fake breakouts when MMs test the waters and try to drive price into the zones, and when volume dries up, it's a matter of time until price reverses in the opposite direction where stops still are (and as a matter of fact their number have increased as stops have gathered because of the fake move)
The fact is that there are dozens and dozens of different types of breakouts. Further, based upon your statement... You imply you know what types of breakouts don't work and what types of breakouts do work. Therefore, are you saying you are profitable at trading breakouts via the ones you say do work??? However, if you don't trade breakouts, why not considering you know which ones work??? Mark
It's alright. I got some other people's lunch money today. I just wanted to point out it's based on lots of things. Also, the reversal can happen very very quickly, like it always does at lows or highs of the day, so you don't always have time to analyze the situation before your stop is elected. It becomes volatile at the extremes, so it always pays to get confirmation. This is just low and high of the day breakouts, not trendline breaks on any timeframe for or against the intermediate term trend.
mark: yes my execution technique is based on breakouts from small consolidation clusters that occur at certain levels intraday. the clusters are formed by one or two S/R levels and a tom de mark trendline. (could be daily pivots, weekly pivots, 00 levels, previous day's high/low) they (breakouts) work with about 70% accuracy WHEN they are sudden and unexpected. example, price is trading above a days designated R point and above the most recent tom demark demand line, making higher closes. If the next bar cuts through the entire support cluster in a downward move, that is a qualified breakout that can also be entered intrabar, not having to wait for the close of the period. if the breakout hadn't followed after a smooth upward move above support, and you would have seen it coming down prior to the break, then capital for the short side wouldn't be enough for the break as it has been spent before the actual break. honestly, i don't really trade breakouts in the classical way, like identifying a range or a triangle and then going for the kill, however, i have seen situations when coincidentally my chart showed a chart pattern like that.
and by 70% i am referring to the probability of the next S/R level being hit. for example, if you use pivot points and you have an upward break of the central pivot resistance cluster, the chance of the next M point (between the CP and R1) is fairly large.