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Neal:
I use I guess what could be defined as breakouts, but they have to be of a
certain pattern formation. I have found this pattern to be about 76%
successful, but as you have so aptly stated, there are those pesky pullbacks
that can take you out. A friend of mine has developed some paint bars and
balls that seem to give a good indication whether it is just that, a
pullback, or a reversal. If the pullback has reached or exceeded my
retracement target then I exit. If after exiting I get the paint ball I can
then reenter and continue on to my price target. However, if I don't get
the paint ball, I can do either one of two things. If it continues to go in
the opposite direction and has given me that same pattern, but as a reversal
I can go with it, or two, I can stand aside. In most cases when it exceeds
my retracement target I stand aside and wait for the next setup.
There is always another train coming down the tracks.
Lamont Cranston
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----- Original Message -----
From: Neal Hughes <neal@xxxxxxxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Thursday, June 01, 2000 8:21 AM
Subject: Re: FW: personal responsibility (was) Re: All Electronic
>
> Yes TJ, right on!
>
> My experience is that trading breakouts are a bad habit..
> Painful and expensive. Weak traders want the security
> of entering a position when it's already going in their
> direction. This is called buying high, and is the first step
> in the trading plan defined as "buy high, sell low".. Hehehe.
>
> Look at most charts, there is usually a pullback after a
> breakout, this causes breakout traders to panic and
> exit at a loss, or a small profit.
>
> If a breakout trader can tolerate the pullback retracement,
> and hold the position for the longer term, they can do better.
> But why enter the trade at a worse price?
>
> What works for me is to enter on the pullback, while
> price is still moving against the direction of the breakout.
> So I enter when the breakout traders are bailing, they
> think I'm catching a falling knife! Then price moves again
> in the direction of the breakout, to my profit objective.
>
> This method dramatically reduces slippage, makes for a
> lower-risk trade, and higher profit..
>
> Exactly WHEN to enter the pullback, that's the trick.. I
> use Fibonacci techniques to predict future price support
> and resistance for this.
>
> -Neal.
>
>
> At 11:46 AM 5/31/00 -0600, you wrote:
> >i just want to clarify what i meant by this statement.....most of the
> intraday/short
> >term traders i've encountered who trade breakouts lose money due to large
> >slippage and panic driven overtrading (excessive commish) in an attempt
> >to make up the large daily losses they incurred.
> >
> >however, a few longer term traders, using setups on weekly or daily
charts,
> > appear to trade breakouts successfully. i can't speak for these guys,
but
> >it appears they are successful in trading breakouts because the trading
> >frequency is much less, overall slippage and commish overhead is lower,
> > and the price moves are larger.
> >
> >sorry guys, but all that long term waiting ain't my bag :))
> >
> >TJ
> >
> >At Wed, 31 May 2000 10:39:47 -0500, "Gaston Lang"
<gastonlang@xxxxxxxxxxxxx>
> >wrote:
> >>I believe it was you that mentioned the masses that trade
> >>breakouts and lose money. This is entirely reactive trading.
> >
> >
>
>
>
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