How about consolidations? These super trending markets where price keeps make new highs/lows are easy to trade, just buy/sell. I find that consolidations are hardest. I either take the extremes, or trade the breakout retest. A lot seem to fail, or have their ranges difficult to define
What matters as well is the size of the winners vs. the size of the losers. 50/50 is fine is the winners are 2 times as big as the losers. What were the % gains on the winners vs. the % losses on the losers? Interested to know.
There is actually no way to tell from that chart if the break out is going to work or not unless you added some indicators. Using a few indicators can help you decide if you want to take the trade or not. Or you can just take every pullback from a breakout if your current win% is 50%, there is no edge anyway unless it is in order management.
I'm surprised nobody has mentioned the importance of higher time frames yet. There's always a higher timeframe somewhere.
I agree with most you say. I want to add something that's rarely talked about involving the so called 50% win rate that's been floating around the world of trading. The problem is that nobody is able to "take every pullback" due to unlimited reasons. One day someone could be sick and not trading. Another week or month someone is on vacation. Another day someone is busy talking to the plumber they called due to the toilet plug problem...so many unlimited reasons why someone is not able to "take every pullback" or "take every any kind of trade signal". Someone did some statistics on this. Documenting every trade signal via his coded program. 32% of the trade signals he was not available to trade and it had an enormous impact on his overall results. In fact, some of the biggest profitable trading days, he was on vacation while in transit and the biggest profitable trading day occurred in the summer on his birthday...same day he took off because his wife and kids had a family day with him to celebrate his birthday. They went to the zoo and his favorite restaurant.. This is why two traders using the exact same trading system will always have different trading results...sometimes very dramatically different results (one a profitable trader and the other a losing trader) because nobody is able to "take every pullback". Its also another reason why backtest results differ greatly from real trading results. Backtest results aren't based upon the realities of the trader's life. In contrast, real money trading involves every thing occurring in that trader's life that will have an impact on his/her trading results.
That is not a trader. Vacation now and then, of course. But if the market is open traders trade. They don't do Zoo trips, they don't do lunch, etc. That said I don't trade pullbacks per se, not what I am looking for.
You've never gone on vacation after becoming a trader ? Never had a doctor's appointment, dental appointment during the trading day ? (dentist's are not open here on the weekends) Never had any interruption in your trading day...schedule or emergency ? (you must not have any kids) Never been sick, injured or caring for someone that's sick or injured ? Wow, that's amazing. Not too long ago I broke my arm (radius and ulna near the wrist)...missed a lot of trading days. Hard cast recently came off. A month before that...took a day off to attend the funeral of a friend. Month before that, took a day off because it was too noisy due to the new roof being put in. Month before that, kids had the day off from school and the markets was open...had to take them to the embassy to apply for their dual citizenship (application only in person and only on the weekdays...appointments only unless its an emergency). Month before that, I took a day off to spend the afternoon with my tax account (attorney) to setup his office having power of attorney and then go see (missed a big trading afternoon) a bank representative (too bad they don't work on the weekends). Month before that, missed a morning of trading because I was witness to a horrible car crash. Month before that, missed a day of trading because I had to spend the day at the hospital with one of my kids because some kid accidentally dropped a 18kg dumbbell on my kid's foot in gym class. Month before that had to miss a day of trading because my other kid had his first ski competition (a big thing here)...lets not forget the fact that some holidays in other countries do not line up with the U.S. when the U.S. markets are open. I envy you...gotta ignore the little stuff and just trade...no matter what. P.S. I keep a trading (diary) and one of the things I document are the missed trading days and reasons. Helps to let me know there are things (happenings) more important than trading...some things we just can't control.
Here was a story told to me by another trader about how he lost $ 750,000 in 1 day. He had open positions on Forex and his wife was sick and he had to take her to a hospital. He normally does not use stops but his broker would close his positions on a margin call. The problem was as the positions were going against him, his broker closed them 1 at a time instead of all at once so he kept losing money until he got back and saw he lost around $ 750,000 that day.
Maybe I do it different, but when family member or good friend needs me now, I close out all day trading positions, I have zero to think about and can concentrate on other pressing needs. Platforms have a zero out button, one second. Have had 8 surgeries in 8.5 years, they won't do them on weekends, I go to zoo once a month, they have Wifi-get to watch monkey's pick their-reminds me of people. You ever hear about automation? It depends on how you define chart patterns and how you define Breakouts, it is better to think in terms of how to define for a Programmer. 1. Define Trend 2. Define how to draw trendline, this is actually harder than you think, took me many years to get a good definition of what pivots I can start a trendline and how to determine how far I can draw trendline, too steep % goes down as being successful and too shallow often bounces off. 3. Define break-what type of break-how far-how little-where is the open or close. 4. Define what next bar should do, with trend, no trend, against trend. 5. Define how many bars it should just hang there and what to do. 6. *Define breakouts for other reasons, like take out HOD/LOD 7. Define too strong/too weak retracement. 8. Define volume when price comes to trendline, if increasing, chances are they it will continue and if volume is reducing it may bounce. It like 50/50 of going through little bit then stall then change of trend or continue of old trend. I love the old signal "Let's screw Weak Traders Signal" Most enter 2 ticks beyond trendline then market goes another 2-3 ticks of slippage, but Pros not selling so they buying and bring price back to same trendline 1-2 ticks higher then trendline to trip weak hand stops and reverse in so many bars back down, by time Pros have all they want, weak hands jump on it and away we go. I will miss out on the trades that keep going but will get onboard with higher low breakout later or not, do I care if I miss a huge move-LOL nope, there be hundreds of thousands more. Just remember when drawing trendlines, there are others who are jumping on board to go other direction, so it could be the way you drawing trendlines would better for going as bounce trade other way.
No surgeries. no zoo. I trade. With TradeStation. No automation. Huh? That's right. Because you still need to be there. Automated or not. Thru a broker link or not. VPN or whatever. Nobody watches their money better than themselves. "I am not so much concerned with the return on capital as I am with the return of my capital." Will Rogers At all times.