System Messages

This forum is for members of the Apiary Investment Fund. To learn more about how to get involved, sign up now or fill out the form below and preview the training right now!

breakout trading

Back to Forums

breakout trading

Sean is a real fan of the breakout, Nate less so. However, assuming I structure the breakout so that the top of the consolidaton phase is a pivot point and the same for the lower, how far out should I place my buy and sell stops to ensure as much as possible that I do not get filled on a dribbling increase, instead of a true surge? This detail is not covered well in the lessons.

If this topic has been covered, already, please point me to it.



Wed, 03/08/2017 - 11:22am
Bob B.

You're at a higher level then me, but if I may make a suggestion, measure the distance between the hi and low of the range. That's my target and stop, as a 1:1 RRR, or use a 2:1 if you're aggressive. I'm happy with 1:1, it hits a lot, 60 to 80 % of the time.

Hope that helps.



Hi Faulder,

It's a good debate. For me the breakout is all about the move from consolidation to expansion in a high probability set up, with an opportunity to hedge your bets by placing pending orders on either side of the narrow range. There's a belief that markets exhibit physical laws of action and reaction (WG Gann) i.e the longer the tension that builds up in the consolidation phase the more the explosive impact of the release of momentum. So not all breakouts are equal. If you can find a triangle pattern for example that's getting very narrow at the price action and is eeerily calm and has been squeezing tighter for a while, then you have a better set up. It's better because you can have a much tighter spread. There is tendency for the breakout to continue in the direction of the trend prioir to consolidation (we are not necessarily talking about binary news events here). You might a get second entry on a pull back for a longer term trade (I note that Shawn seems focussed on gathering the immediate profit of the initial bar - he referred to momentum bursts in general price action).



For me, what I do is to look at the entire structure of the price chart and see where the support and resistance are at. If there is no clear indication then I will want to put the TP line a little higher than the trailing stop. Why you ask, well you want to make sure that when the trade gets filled and moves in the intended direction that your take profit target is greater than your (trailing) stop loss so you are assured of a profitable trade if it changes direction on you.