Interesting you bring up soccer. Like baseball, the game of soccer offers many similarities to consistently profitable trading, the major one being that the overwhelming majority of goals are scored via the (at first) counter-intuitive strategy of passing the ball back, counter to the direction you want the ball to end up.
NoDoji, would you say that your STRATEGY is breakouts, but you use the TACTICS of waiting for a pullback?
That's my top strategy, no doubt. If the breakout occurs with conviction and isn't running directly into some longer term S/R level, I will get in on a pullback. This morning in CL as soon as price broke out of the opening range, I'm looking to go long until there's a clear reason not to. For me the clear reason to take my foot off the gas was the weak breakout of 95.30. That tells me the trend is getting (temporarily) tired. (.31 and .40 are 60-min key R levels.) I still tried another long, though, because "they" got my back in a trend. Good for a scalp
To exploit value. Price is subjective, value is subjective and at times can be objective. What's valuable to you may not be valuable to someone else. A physical trader(ie. farmer) derives value from being able to sell his/her inventory in the future (knowing their business, costs, margins) able to lock in prices 6-12 months out. The prices the farmer locked into is their perception of what value is (from their viewpoint) A financial trader may not share the same perception. Of course they can sell at same prices as the farmer.. but the difference is they don't have the underlying inventory to deliver, unlike the farmer. The farmer has more advantage, understands the cycle of production for whatever underlying they deliver. A financial trader may possess same caliber of knowledge.. but without the underlying to deliver.. they are just speculators trying to exploit value.
Thanks for reply. Another question if i may: If the breakout is very strong, it may not pull back or if it does, the pullback maybe at less favourable prices. What do you do in this event?
There are debtors and there are lenders. Lenders are usually a lot happier than debtors. Trading is neither one, trading is bringing something that somebody else wants and making money for making it available. If any borrowing on the part of the trader is done it lasts only the time that the item being traded is in transition. My guess is that most of the people that dislike traders are themselves debtors. They deserve to have that thrown in their faces when they criticize traders imo. As businesses go, trading is usually more profitable than working for a wage. Trading is a way to make the transition from wage earning debtor to lender. Trading solves problems for people and brings gains to the person astute enough to be in the trading business. King Solomon had neighbors on one side that raised horses and neighbors on the other side that built chariots. He made a fortune trading horses for chariots and chariots for horses. Trading brings quick solutions to problems but also it can sustain problems. King Solomon could have brought his neighbors together and they could have taught each other their skills. That would have solved their needs for horses and chariots but it would have left King Solomon strategically disadvantaged with two neighbors with powerful armies and no dependence on him.
Sometimes I miss out, but more often the 1-min chart has at least a small dip to enter from. I have some detailed rules for entering a strong trend on pullbacks because I personally want to keep my R:R within very specific parameters. But if you're willing to place a slightly wider stop loss, you can pretty much enter a strong trend during the first little pause in the action, which is where counter-trend traders think price is reversing, and if you've ever been a counter-trend trader trying to pick a top or bottom, then you know how quickly the profits can add up for the traders on the other side of your folly
I have always seem to have this fear of missing out so I always (pretty much) buy the break and not wait for a pullback .
There are times when that makes sense, but this morning for example you wouldn't want to buy any breakout into the 95.31-95.40 zone because that was range high R levels on the hourly chart. Now if that range broke out pretty hard and price pulled back, I'd have been looking for more long action. Now look where we are right now: 60-min 20EMA, previous close, 60-min WRB low and smack in the center of the range. I sit tight now, no trade without one side or the other tipping its hand. EDIT, the above should say wouldn't, not would, I corrected that!