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Thread: Biggest question: reversal or breakout?

  1. #1
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    Biggest question: reversal or breakout?

    Hi there

    in recent months I am working hard to identify it will be break out or reversal.

    I have build my strategy that works fine for reversals, but during US session
    there are nice break outs happens even no news and my reversals does not work on that
    session, except if prices moving near price average of 60 days - that is different story.

    I wantrf to learn to identify it and started using volume indicator.

    What do you recommend and use for break outs, guys?
    Also does thinkor swim better than MT4 platform?

    Tadas

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    advert via signature isn't allowed edited by Gamer

  2. #501
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    Quote Originally Posted by Senorita View Post
    Breakout don't just happen. There must be a strong level the market ought to reach before we can anticipate breakout or reversal to take place. One of such level is the support and resistance levels where the market will give traders all it takes to be at a strong point where we can wait for breakout or know where reversal will take place. Experience is needed to trade at this level so that we don't follow false breakout or see ourselves making the wrong trade.
    Breakout usually happens near the pivot points or SOR levels and sometimes the market might just move few pips past these levels and then move the other way out. Experience surely have a big positive impact on trading. When you have experience you can better make out the market trend through strong analysis and manage things well and adequately. Actually market does not move straight, and even in the midst of a trend it can move in sideways for sometimes.

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  3. #502
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    When we trade reversals, we will get lesser opportunities depending on the time frame we want to be monitoring, it is not even advisable to use smaller time frames for our reverse trades because that could bring some unusual and unexpected losses, but with the break out strategy, we can trade with any time frame, trends are based on the time we are observing, this is because we can be in a good trend on the longer time frame but could be bearish when we go lower.

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  4. #503
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    Quote Originally Posted by Bhave4U View Post
    Breakout usually happens near the pivot points or SOR levels and sometimes the market might just move few pips past these levels and then move the other way out. Experience surely have a big positive impact on trading. When you have experience you can better make out the market trend through strong analysis and manage things well and adequately. Actually market does not move straight, and even in the midst of a trend it can move in sideways for sometimes.
    That is why for breakouts we need to keep focus on the SOR levels and these levels are important forr trading trends too. Trend trading is good but then reversal is also good only thing is we have the knowledge and avoid scalping. Things are difficult but if we learn a strategy then we can know what we should trade, breakout or trend or anything.

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  5. #504
    Trader ola4real's Avatar
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    Quote Originally Posted by mudassor View Post
    If a trader fully understand chart movement so we understand easily about the situation of market , like it is moved for reversal or breakout happen we have to wait for few pips movement because in both way market move highly so first if we confirm our entry then the chances should be increase in market for make good and effective trade system .
    It is not as simple as that. Following the chart movement is even wrong for forex traders, what is right is to follow the chart pattern, it is through that pattern that forex traders can predict where the forex price is heading to on a certain asset. If traders do not want to go for that, the best option who is even better is a breakout strategy. I like it so much, the breakout is making forex traders to trade a good trend in forex field.

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  6. #505
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    Quote Originally Posted by ola4real View Post
    It is not as simple as that. Following the chart movement is even wrong for forex traders, what is right is to follow the chart pattern, it is through that pattern that forex traders can predict where the forex price is heading to on a certain asset. If traders do not want to go for that, the best option who is even better is a breakout strategy. I like it so much, the breakout is making forex traders to trade a good trend in forex field.
    Chart movement is the base for planing of trade , because if we have ideas about such movement we make our trade plan , it is depend on trader learning and trader practice on demo account which direction and pattern is favorable for trade and we attain good results which will give ideas for secure trading .

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  7. #506
    Trader SimonAnderson's Avatar
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    We should not fully focus on technical charts without understanding why the chart is formed. What we see on the chart, is a combination of the strength of two currencies. These two forces can strengthen or weaken, and that results in price fluctuations. For example: in the same currency pair, for example GBP / USD compared to EUR / USD, when GBPUSD / USD has a reversal, while in EUR / USD there is a retrace, even though both of them are have base currency USD. Why can one be reversed while the other one just retrace? The answer is the difference in strength in GBP and EUR.

    By better understanding the power behind the chart, it is easier to react to what will happen.

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  8. #507
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    I say reversal, ever since I studied forex and started trading forex, I have always had a reversal kind of trade these is why am for reversal its easy to identify a reversal trade than to trade a break out, but also reversal have a down side to it, when you trade forex it can be a little bit tough to identify a true reversal and differentiate it from trend, its a tough call but one has to think of it, its a good thing that when we are trading there is a a certain chance to which you are able to move forward when you are trading, reversal are not as profitable as break out unless you are trading higher time frames

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  9. #508
    Trader Toyen's Avatar
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    Quote Originally Posted by mudassor View Post
    Chart movement is the base for planing of trade , because if we have ideas about such movement we make our trade plan , it is depend on trader learning and trader practice on demo account which direction and pattern is favorable for trade and we attain good results which will give ideas for secure trading .
    Chart movement needs a strategy to be analysed, not planning, planning of traders comes in different angle apart from that. The number one thing which traders need is to find a trading pattern or strategy to be using, and i like the breakout strategy to be doing that for me. When the strategy of the trader is good in making consistent profitable earnings, the planning of traders will now be on the money and risk management to use in complimenting that strategy.

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  10. #509
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    Quote Originally Posted by Toyen View Post
    Chart movement needs a strategy to be analysed, not planning, planning of traders comes in different angle apart from that. The number one thing which traders need is to find a trading pattern or strategy to be using, and i like the breakout strategy to be doing that for me. When the strategy of the trader is good in making consistent profitable earnings, the planning of traders will now be on the money and risk management to use in complimenting that strategy.
    Yes many traders try to tap the potential of a trend and for that they need a good strategy that allows them to understand the market situation. Trend and reversal have some relation and to be a good trend trader we need enough knowledge to detect trend reversals too. It is required that a trader learns a strategy so that he better knows what to trade and when to open and close the trades.

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  11. #510
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    Break out strategies have more attention than reversal, I have a strategy which is the 200 exponential moving Average with the RSI to be my confirmation, from what I have observed using this strategy, it catches more trades after price has broken a key support or resistance before it can make a retracement back to the moving average in order for me to buy or sell.

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