Rayner: 00:00 The first thing I want to share is that there is no way that you can 100% avoid a false break out. Because that's like saying, "How do I win 100% of the time in trading?" It doesn't exist. So embrace this fact that break outs will fail, no matter how beautiful the pattern is, how high probability the chart may look break outs can and will fail.
Rayner: 00:32 Once you accept this fact, I want to share with you three tips that I personally look for whenever I trade break outs. Number one trade break out with built up. So what is built up? Build up is basically a tight consolidation you see on your chart where the range of the candles get small and tight. That's called a 'build up', and typically like let's say, for example, I want to trade a break out of resistance, I will look for a build up at the highs of resistance. Meaning if the price comes into resistance, I want to see the range of the candle get tighter and tighter. Consolidating for about five to ten candles, before it breaks out.
Rayner: 01:05 Why do I want to see that? Because number one, you have a tighter stop loss which improves your risk to reward, because when there's a build up, you can just simple set your stop loss at a low of the build-up instead of the low of the entire range, which is pretty done wide. That's number one, a tighter stop loss that eventually offers you a better risk to reward. Number two, when you see a build-up, it's a sign of strength because it's telling you that buyers are willing to buy at these higher prices, willing to buy in front of resistance. This is a sign of strength, and these are the two reasons why I love to trade break outs with build up.
Rayner: 01:39 The second tip that I want to share with you is watch how the price action approaches the levels that you're looking to trade the breakout. Let's say for example again you want to trade resistance, you want to trade the break out of it, watch how the price action approach resistance. So what I want to see is higher lows coming into resistance, because this is a sign of strength, it's telling you that the buyers are willing to buy at again these higher prices. On top of it, it looks somewhat like an Ascending triangle, and it typically is from this type of stair-stepping price action to a point where it starts to coil very tightly, and again this is another form of a build up, and really more often than not, the market is likely to break up higher. Again, watch how the price action approach resistance. Ideally, you want to see higher lows coming into it.
Rayner: 02:22 The third thing I want to share with you is to let markets break out. If the market does break out and you are not in a trade, what you can do is to wait for the first pullback to occur, and this can appear in the form of a trend continuation trade, for example, a bullish flight path and a symmetrical triangle. These are possible chart pattern that you can trade, to trade the subsequent move higher.
Rayner: 02:55 These are the three tips I would like to share with you to find higher probability break out trades. That's all I have for you in today's episode. If you have any questions that you want me to answer, leave it in the comments section below so I can look into it and answer in the next episode.
If you want more actionable trading tips and strategies, go to https://www.tradingwithrayner.com
Thanks for watching!
FOLLOW ME AT:
Facebook: https://www.facebook.com/groups/forextradingwithrayner
Twitter: http://www.twitter.com/rayner_teo
My YouTube channel: http://bit.ly/2EFg5VN
Rayner: 00:32 Once you accept this fact, I want to share with you three tips that I personally look for whenever I trade break outs. Number one trade break out with built up. So what is built up? Build up is basically a tight consolidation you see on your chart where the range of the candles get small and tight. That's called a 'build up', and typically like let's say, for example, I want to trade a break out of resistance, I will look for a build up at the highs of resistance. Meaning if the price comes into resistance, I want to see the range of the candle get tighter and tighter. Consolidating for about five to ten candles, before it breaks out.
Rayner: 01:05 Why do I want to see that? Because number one, you have a tighter stop loss which improves your risk to reward, because when there's a build up, you can just simple set your stop loss at a low of the build-up instead of the low of the entire range, which is pretty done wide. That's number one, a tighter stop loss that eventually offers you a better risk to reward. Number two, when you see a build-up, it's a sign of strength because it's telling you that buyers are willing to buy at these higher prices, willing to buy in front of resistance. This is a sign of strength, and these are the two reasons why I love to trade break outs with build up.
Rayner: 01:39 The second tip that I want to share with you is watch how the price action approaches the levels that you're looking to trade the breakout. Let's say for example again you want to trade resistance, you want to trade the break out of it, watch how the price action approach resistance. So what I want to see is higher lows coming into resistance, because this is a sign of strength, it's telling you that the buyers are willing to buy at again these higher prices. On top of it, it looks somewhat like an Ascending triangle, and it typically is from this type of stair-stepping price action to a point where it starts to coil very tightly, and again this is another form of a build up, and really more often than not, the market is likely to break up higher. Again, watch how the price action approach resistance. Ideally, you want to see higher lows coming into it.
Rayner: 02:22 The third thing I want to share with you is to let markets break out. If the market does break out and you are not in a trade, what you can do is to wait for the first pullback to occur, and this can appear in the form of a trend continuation trade, for example, a bullish flight path and a symmetrical triangle. These are possible chart pattern that you can trade, to trade the subsequent move higher.
Rayner: 02:55 These are the three tips I would like to share with you to find higher probability break out trades. That's all I have for you in today's episode. If you have any questions that you want me to answer, leave it in the comments section below so I can look into it and answer in the next episode.
If you want more actionable trading tips and strategies, go to https://www.tradingwithrayner.com
Thanks for watching!
FOLLOW ME AT:
Facebook: https://www.facebook.com/groups/forextradingwithrayner
Twitter: http://www.twitter.com/rayner_teo
My YouTube channel: http://bit.ly/2EFg5VN
thank you my friend you cutiee😜😝😊
Thank u so much my friend
how to recognize false breakout before a big move
Can you give tips for how to trade in intraday and 5 minutes chart????
How to trade in range bounds
need intraday series frm u , John Connor👆🏻👆🏻👆🏻 I will b back.
Thank you sir
Hi Rayner, can I know what broker you are using example XMTRADER mt4, hotforex ect?
Hi Rayner ! I heard that most of traders said that people should not trade correlated currency pairs at the same time and only trade 7 or 8 major currency pairs due to high liquidity. However, major currency pairs relate to USD, even oil and gold also relate to USD. It means that traders should open only 1 position in a meanwhile ? Thanks so much !
Please Please Make A Video 🙁 How Do We Know On 5 mint chart or Any other Chart… That If We Place A Trade ? How much times it takes to reach at our Take Profit… Or If We place A wrong trade then How Can We Know How Much Time We Have To Wait… Please.
I see you usually use the daily chart. You have any suggestions for traders who are daily trader and using H1 and H4 timeframe? Also for H1 and H4, how would you set up the MAs, still 20,50 and 200?. P.s. love your channel, whenever you have a chance to visit Bangkok and need a guide, let me know brother.
Nice
Thank u so much my friend
Hello my friend how are u, thanks
I like your SISPEC haircut lol. Great videos.
One important to thing to note is that the statistics for breakouts are actually pretty poor. 60% of breakouts fail. Mostly because professional traders are hunting stoplosses for liquidity. It's easy picking for them. While the build-up part you mention is right, on the intraday chart, it tends to murder retail traders. Institutional traders will false break-out boths way to take out amateurs, while giving them liquidity to go back in the original intended direction. Sucks, but that's life.
I have one tip that may shed some light. You want to see momentum with your break out. Big engulfing candles. It shows conviction behind the move especially after a build up. You can also use indicators such a MA crossover at a built up area (8/21 EMA being my fav as they are fast fib numbers) or Oscillators (either Overbought, Oversold signals or divergence).
The key thing here is to come up with an idea and test them over at least 100 trades (like Rayner has mentioned) and see if it has positive expectancy. These tips that Rayner has provided alone will not solve your false breakout issues if you do not do your homework.
Once again, thanks Rayner!
hi if the breakout happend what candle shoud i wait to close high time frame 4h or low time frame 15mn thanks
Hi Rayner, can you talk something about market manipulation? is any way to be alert about them? Tnks
Win by the law of probability