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Chapter 14, Part VII. Triangles. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: Ok, let me continue.

    3. The aggressive way of trading offers the followed procedure. If you can’t estimate the probable direction of breakout, then you can use OCO order, or just do this manually. You can place two stop entry orders (buy order above upper border and sell order below the lower one of triangle). When breakout will happen your stop entry order will be hit and second order will be canceled (or you have to cancel it manually). But this way has couple of additional risks – you should place farther stop loss order, because during the breakout the market could show significant volatility. Second – you have to hope that this breakout will be true. If not – then, probably, you will lose your money.

    4. Finally, the most preferable and softer way is to open position prior the breakout, based on some market signs, as with wedge pattern that we’ve discussed. It could be some patterns, trend signals or something. But the major task here is to estimate a good level for stop loss placing that will be crucial for further market move. Other words – if market will hit your stop loss, it should mean that you definitely wrong and shouldn’t expect breakout in this direction any more.

    5. And last significant issue. If you expect some breakout – draw Fib support or resistance lines from previous large swing, after which triangle has appeared. If there is Confluence support or resistance, that stands very close to some border of triangle, and breakout has happened in direction of this area – be aware of fake breakout, because strong support or resistance could clap the market right back into the triangle.
     
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