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Old Jan 13, 2011 11:19pm
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Default False breaks

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Originally Posted by Carnegie View Post
Hi guys,

This is what happened:
The market trended down strongly, then was in a consolidating or congestion, easily drawn by two horizontal lines.

Fair enough I thought, I put up an upper and lower horizontal lines which also created my boundaries.
As smart as I am, I put up breakout orders BOTH directions (I know, I'm a sharp, greedy little kid.. Trying to catch both movements!!)



What does that tell me?
That tells me that I am STUPID. That tells me that my entry was someone elses short and my stop-loss was someone elses take profit. It almost...
Hi Guys, thought I'd add something I learnt recently.
Like all newbies I first started trading breakouts, with similar results as Carnegie. I often thought after many losses if only I did the opposite I would be much better off. I since learnt that 80% of breakouts will often fail. So now I often will trade the false breakout, ie the re entry into consolidation. It limits my risk because I can use a tight stop if im wrong. When price moves back into consolidation all the breakout traders will need to cover, so there stops are triggered adding momentum.
p.s example is recent eur/usd
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