To STP LMT a Breakout or Not?

Discussion in 'Trading' started by rc5781, Sep 25, 2008.

  1. rc5781


    Just wondering if any of you play breakouts on the ES consistently.

    I'm wondering how to assess whether a break of a certain level is a true break or likely to fail. And this assessment would occur BEFORE the actual breakout.

    For example, a stp lmt buy at 1200.50 at 9:40am was money in the bank today. How would one know that before the actual break?

    I've been using a stp loss of 3pts from the stp lmt.
  2. lindq


    First, 9:40 was more of a break DOWN than a break out. Trading is always easy looking at charts in hindsight. (Just ask anyone who has written a book on trading.)

    Your question is the same as asking "How will I know when the market will rally ahead of time."

    That you will never know. The best you can do is place your bets based on a study of similar past events and the statistical probabilities.

    For example, if you were to look at 6 months of 1 min data on the ES, and found that between 9:30AM and 11:00AM, every time price broke above the highest close of the last 20 bars, you were likely 62% of the time to make a profit of 3 points with a stop and target of 3 points, then you might want to take the trade.

    But without that or similar knowledge, you're just taking a crap shoot. Which isn't a good career move if you're planning on staying in the trading game for long.

    IMHO, that's particularly true of a day like today when the ES is acting like it's on crack, being pushed up down and sideways by every comment from some lame congressman coming out of Washington. Not a good environment for trying to outguess the market.
  3. rc5781


    sell stp lmt at 1194.25 anyone? hmm?