Has anyone had any success with trading breakouts / breakdowns, NOT reversals off resistance / support? If yes, then any tips on how to do it better. Or should I simply trade the moment breakout / breakdown occurs? Many Thanks, Bob
it depends on your time frame. But recently there is a lot of turtle soup made ! so breakouts seldom work on Naz imho at the moment. But that's not surprising. in a trending market [again depending on your time frame] breakouts are fine, but in a directionless or corrective market, support/resistance rules.
Best plan lately is to look for the break, and sell into it. I used to trade them, but not any more. It's a bad way to make money.
Intraday, use 5min compx chart, look for trend reversal, and make sure you are on the same side of the overall trend, i.e., the trend on daily and hourly charts. I made some dough trading break-downs during the bear days, felt like a genius, it took me a while and some drawdowns to realize break out/break down won't work too well anymore. Market always move in the direction that hurts the MOST people, when too many daytraders look for the same pattern, it almost always fail.
Sell short into a breakout? Are you serious? Should I average up on the way? What money management techniques would you be using when utilizing such a strategy?
<< Sell short into a breakout? Are you serious? Should I average up on the way? >> He might have meant breakdown, he didn't mention which way the stock was breaking, so I assumed it was down. Thanks for all replies, Please keep on posting! We can all learn from each other. Bob
I dunno, I mean if you follow the relevant sector index/futures/major index you can get a feel for the break out/down.
Selling into the break out is known as 'turtle soup'. This is explained on several web sites.. Sorry I don't have much time right now to reply more. Maybe P2 can fill you in. When you think about it, it is the logical thing to do in certain market conditions. Not today ! [july 12] but any day before it worked well. Turtle soup is a part of support/resistance plays.
well, maybe not selling directly into break out, but when you get confirmation that the b/o or b/d failed, you can bet there are plenty of traders caught on the wrong side and maybe you could take advantage.
<He might have meant breakdown>... hmmm? I'm note sure what he meant but I've been shorting stuff that appears to be breaking out... it just turns out that it usually doesn't continue up. It tops out and turns into a nice short scalp. Check out the 1 minute charts for most of the tech stuff.... lots of opportunity for shorting the "breakouts". I think it's characteristic of being range-bound. IMHO