|
Can You Know When the Breakout Will Occur? |
|
Written by Lance Beggs
|
|
Trader Q&A - You Don't Know When the Breakout Will Occur... I received the following YouTube video comment related to the recent 'How I Trade Breakouts' video and thought I should share my response. The comment reflects a very common belief. Of course, that doesn't mean it's right! Comment: Entering before the breakout provides good reward risk ratio. The problem is you don't know when and if the breakout is going to occur.....maybe days or weeks ! Response: Hi,
(1) 'days or weeks' depends on timeframe obviously. I'd die of boredom waiting that long for a move.
(2) You're correct in that a trader cannot 'know', as to 'know' implies certainty. The nature of the markets is uncertainty, so no future movement can be 'known'.
However it is possible to subjectively assess the likelihood of various probable outcomes. Through a study of price action a trader can identify changes within the nature of the price movement which indicate an increased likelihood of a breakout. These setups can offer a higher probability of a move in the near future, and as you suggest they can pay very well. Don't just see the macro level pattern, study price action within that pattern. |
Articles 
