Yes, there were failed breakdowns too on the Ftse opens that caught one of my systems 3 times this week. Of course I've seen this before with breakout systems and accept this as the cost of doing business. With enough sample size it's clear to see that after this occurs there is usually some larger breakdowns to follow (by this time the algo trader may have switched off the system).
You see, the same games occur for algorithmic traders, and all the same trading mistakes can be made as manual. Just the execution and prior knowledge is the difference. No athletic performance required in real time, this bit happens after hours in a different state.
The breakouts only come it four types imo: valid, back tested and valid or failed(which can also get back tested). Your If/Then scenario planning lets you know what to do.
Fortunately this week I had mean reversion breakdown work on XJO and breakdowns work on HK yesterday for 400pts.
Tom Hoougard must be the best known price action trader that trades our style. He has published an opening drive strategy that flips the trade. Many have built this for algos, but having looked at them they provide no extra edge to running the trades individually, specifically because they can get caught both ways for a loss but can't win both ways. So winners must be outsized to flame out the losses and that puts these systems in the Turtle trader basket with a low W/R making them harder to follow.
My rule of thumb is every trade has to support itself and show maintainable edge across all cycles, broker errors, news events, trend direction and human error. Only then is it a keeper.
What's working very well at the moment is small fake outs into trends. So, counter trend entries in pre market or the open then become a 2-8hr hold (as opposed to 30min-1.5hrs). As everyone can see, this was the week things flipped from long to short bias and there is usually a few unclear days as it's rolling over. Lower TF traders can easily measure this by adding a sma1000 to a 1min chart for entry and trade a 5/15 HA chart for continuation. If the sma 1000 is pointing down even the slightest bit over 100 bars (biased by 1 or 4hr trend) and the 1 min PA punches up on the open then it is worth a short attempt with conviction and a tight stop (or very wide for HK factoring in atr). Combine this with a Major support/resistance to confirm the fakeout or breakout and use these to set targets like Jaba, you, Dr, Fadz etc. leaving the weaker ones for someone else.
Even if this is not traded, it's a great indicator to what types of trades will likely work. I reckon that is the most important puzzle piece to have a handle on.
You can make a living alone of this set-up in all markets if you trade just opening drives but adjust to fake or break pattern in real time. I do this across xjo, hk, ftse and nasdaq every day, probably average run 4-6 trades a week but it varies with volatility. I did the same manually. Other styles of trade are the icing on the cake and must be non correlated and support DD's of he opening drive system.
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