First Hour Breakout Strategy

[4xpipcounter]

View attachment 16741

I hope no one minds me jump in the middle of a conversation, but I read many of the excellent posts concerning the breakout, but not all of them.
The link will take you to the USD/JPY, which is a trade am waiting on. When a TL is drawn correctly, there will be a huge breakout, such as what you see on the chart. What also happens is after the breakout, there is a correction back to the point of the candle broke the TL. That is where I am going short. The move afterward will take the price action to at least the dip that was created after the break of the TL.

The reason I am bringing this up is because there are many false breaks that happen. On many breakouts, many people find themselves chasing the market in hopes of grabbing a nibble of it.
What I showed is how to be bale to take advantage of that entire move, and you still have time to react, or even set an entry.

Also, notice the red TL coming down. That has to contain because the price action from the break of the blue TL has to play out.

 

[Vijay11]

Hi Friends,

I have read the complete thread and the strategy as well as comments from the Seniors were quite encouraging.

I hope to learn a thing or two from you friends on Day Trading.

Thanks
Vijay11

 

[Sammy.Young]

Why thread is so dead?

 

[vikas1985]

why this thread is going on?

 

[abhi_tyagi]

While going through the forum, I just got to see this thread. Though there is not much activity in the thread since a long time but this strategy seems to be interesting. I just wanted to know from the senior & learned members of the forum -
1- Is there anyone using this strategy successfully.
2- Is there a way we can apply this strategy in option trading or it can be modified to work in options.

Thanks in advance

 

[vijkris]

While going through the forum, I just got to see this thread. Though there is not much activity in the thread since a long time but this strategy seems to be interesting. I just wanted to know from the senior & learned members of the forum -
1- Is there anyone using this strategy successfully.
2- Is there a way we can apply this strategy in option trading or it can be modified to work in options.

Thanks in advance

hi, I have not used this in options, no idea.
I din know this thread exists..
have used similar strategy in past,with moderate success..
method z good, need proper psychology to hold the trade, .
well I lost my backtested data otherwise would have posted here. it has success rate of upto 55%, if exit is @ EOD.
in good trending days it is excellent.
reversal days surely one side sl hit.. on event days one should use it only after market digests the news.

 

[Somatung]

2- Is there a way we can apply this strategy in option trading or it can be modified to work in options.​

Yes, it easily can be done. How? By understanding how options do work and by understanding the different option strategies in dept and how to implement them in different ways into the market. Absolute no problem. But this is hard and time consuming work to learn, so most here do not like to do such hard and time consuming work, instead want to know pure future trading as you easily can see by the answer of dear Vijkris.

So better follow the masses here in the forum and concentrate on future trading, as you will find more answers here on that topic, as the option topics are not given away for free just so easily.​

 

[abhi_tyagi]

Thanks a lot sir for your reply. I am already a big fan of yours as you are the option guru here in this forum. i have read your ever green thread many times & learnt a lot from that. so there will be no better person than you to answer this question.

1- First in this strategy they talk about the price levels (for entry & exit). They are placing the order in the system beforehand. But as the option pricing is different. So suppose i am trading in nifty option should i watch the level of nifty (first hour High/low) for entry or should i watch the put/call premium (first hour high/low) & make the entry/exit as per that.

2- Dear Somatung sir do you personally think this kind of strategy can work & sustain in long term in option trading. I wanted to know about option as i only trade in nifty option & never trade in future.

Thanks in advance

 

[Somatung]

@Abhi_tyagi

Will give a post to yours on Monday and you can count on this. Ok. Weekend is weekend and so lets enjoy it.​

 

[Somatung]

@Abhi_tyagi

As promised, here some information from my side and some thoughts you can handle or use what ever way may serves you:

Point one:

Entry levels are the high/low of the first hour candle per rule. As you know this levels, you can enter the market with a market order on the call side and on the put side. But here you already have to know what you do, as you can choose otm, atm and itm options. Next point are the filled you get with market orders on options as well as in futures. If you are quick and know how to calculate the fair value of an option price, then you can do it with limit orders. But limit orders are not always filled. (Check all the order possibilities your broker offers and then act according to what you are offered by choosing the method for your needs)

As soon as you filled, you would need to place your stop loss levels. Even here you can choose different ways, either on the price of the option, or on the strike level of the underlying or with a hedge with an other option or with a hedge from an other derivative and so on.

To take profit you will need to know which level you will choose. Even here we can go for different ways and his way is a target of 75% of the last one hour range. So you calculate the fair value option price, consider the bid ask spread and place a limit sell order or you sit in front of the screen and give a market sell oder at the time your level is reached. Choice is yours.

Point two:​

I would not recommend to play the mentioned strategy in post one in this thread with options, instead stay with the share. But this is my view and others have other views. (A final word on this at the end of this post).

Now coming to your other thread about Option Trading strategies Vs Technical Analysis

You can trade options with out knowing much about TA. In this case you will use math models to have your levels for your option legs you use in your option strategies. Here you best use any kind of option strategies analyzing software to be clear about your Break Even points on any side. Further you do very good when having knowledge how to adjust any of such option strategies, as market in many cases will come to your break even points and then you need to know how to act if you not have a strategy running which is already above the zero risk line.

If you do or prefer directional option trading, which also can be done with option strategies best through leg in and out and the mix of different derivatives, then you will do good to understand about TA. This will help you to do better entries and exits. You also can trade options on option charts.​

So it is your choice on what topic you want to spend more time and how you will implement your knowledge in any kind of trading plan. Such a trading plan should be the final outcome of any such studies before you spend any money in the market with the outworked idea. As told: What ever you want to do with options, you can do it with the need how much you understand about them and what possibilities they give in any market under any conditions. Still: There is no need every thing to adapt to option strategy trading, as many ways of trading, for example in plain futures, do the job at its best. So having knowledge about all this different ways of option trading is only the icing on the cake. But a cake can be eaten with out it.

Hope it helps a bit and take care / Dan​