How I trade a break out.
Updated
I see a lot of charts that say buy/sell the breakout. Problem is how do you do that? Well this is what In look for.
I am looking for a correction around the trend line (TL). I prefer a break of the trend line. If price breaks the TL and then follows it back in a shallow flag, it is most likely going to break in the original direction. I draw a LTF (lower time frame) TL and enter on a break of the LTF flag.
I need to see at least 3 LTF sideways or shallow pull back candles. If price does not break within 5 candles I reassess as this will mean potentially a larger correction is imminent.
If price pulls back sharply I wait for another strong candle to break the TL and start the process again.
If price goes a short way and starts to correct again I take my trade off for a small profit or move my stop to break even as this indicates it may be returning to the wrong side of the TL.
I put my stop above the last pivot in the structure.
This chart is showing the LTF candles of a break of the 4 hr TL.
Educate yourself, create your own trade plan, Validate your trades with other trader's ideas. Own your trade good or bad.
I am looking for a correction around the trend line (TL). I prefer a break of the trend line. If price breaks the TL and then follows it back in a shallow flag, it is most likely going to break in the original direction. I draw a LTF (lower time frame) TL and enter on a break of the LTF flag.
I need to see at least 3 LTF sideways or shallow pull back candles. If price does not break within 5 candles I reassess as this will mean potentially a larger correction is imminent.
If price pulls back sharply I wait for another strong candle to break the TL and start the process again.
If price goes a short way and starts to correct again I take my trade off for a small profit or move my stop to break even as this indicates it may be returning to the wrong side of the TL.
I put my stop above the last pivot in the structure.
This chart is showing the LTF candles of a break of the 4 hr TL.
Educate yourself, create your own trade plan, Validate your trades with other trader's ideas. Own your trade good or bad.
Note
A little more clarification on entry and stop placement how I trade the break out.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.