Dispelling The Myths About This Powerful Method Of Futures Trading
Five Years And Counting
It’s been 5 years since I first came up with the concept of my Momentum Breakout System for day trading the futures. Now some of you might be scratching your head thinking… “Momentum BREAKOUT System ??? ” …but I have heard that most breakouts fail and aren’t worth trading? What gives? ” Like most traders I must admit I used to think the same exact way about Breakout Style Trades and typically steered clear from this form of entry in my own trading. I have also found that in most discussions about the pros and cons of different entry types, i.e. pullback entries vs. counter trend entries vs. breakout entries, etc that the Breakout Method always tends to get the bad rap. And the negative press for Breakout Entries is widespread.
Just recently I stumbled across a YouTube video where a 20-ish sounding youngster – (attempting to come across as a seasoned trading guru) – proudly proclaims “BREAKOUT ENTRIES DO NOT WORK!” and then goes on to explain… “because with breakouts you are always just chasing the price.” he then asks “Who wants to be late on their entries all the time?” So ingrained is the always “BUY LOW – SELL HIGH” mantra in the trading community, that at first glance this sounds like a reasonable argument, and in fact when looking at a chart it can sometimes look like you are getting in late when you to play breakouts.
But I am going to show you why this a false argument. In this blog post I will dispel several of the myths related to breakout trading and show you why playing my Momentum Breakout Alerts delivered through my Emini Desktop Alert Software will be YOUR BEST METHOD to trade the futures market.
Late Night Epiphany Leads To Drastic Paradigm Shift In Trading Approach
Five years ago I was still stuck exactly where many traders find themselves now.. i.e. jumping from one “cool” “trick” setup to the next. There are literally hundreds of ways to attempt to determine where to get in the market, each with their own pros and cons and sets of rules. Some are simple and some get rather complex. Some work on fast timeframes and other slower timeframes. Many are redundant being the same setup disguised in a different set of rules.
Little did I know at the time, that I would soon be making a major paradigm shift in how I approached finding good trade entries in market.
Within a few months I put my futures trading career on a brand new path allowing me to see price action in a whole new light – and triple the points I was capturing. You see most traders are constantly obsessing about where and how to get into the market. Where is the next setup? Where is the market likely to change direction? Where is another place to take a good position? It’s easy to get caught up by this merry-go-round of entry confusion with so many entry styles to choose from and so many trading gurus to follow telling you what supposedly works and what doesn’t. At first it can seem intellectually stimulating and you can be like a kid in a candy store wanting to try them all, but in the end just become more confused. A confused trader is a losing trader.
My epiphany came late one night when I asked myself… WHAT IF… instead of focusing so much about where to get into the market with a cool setup… I could just figure out WHEN TO STAY OUT of the market? I theorized that since “Market Noise” is the #1 leading problem we face as traders in attempting to determine our entry spots, if I could suppress the noise this might expose me to less failed trades.
Understanding The Significance Of Market Noise
First off, what is market noise and how does it affect trading? Probably the best way to describe market noise is ANY PRICE MOVEMENT THAT LACKS TECHNICAL SIGNIFICANCE, or put simply, if you trade off it your results become more randomized. We know for example that any sustained directional price movement is driven by an imbalance in market sentiment. If buyers are more enthusiastic the market will go up and vice-versa. What changes Sentiment? Market sentiment can be altered by the news or sentiment can simply feed off itself.
For instance a major news event can cause the market to become extremely Bullish or Bearish and suddenly cause price to BREAKOUT of a congestion zone that it has been stuck in. But even without news sentiment can increase drastically. If some trending action spontaneously begins for instance, it is likely to attract attention of other market participants who also want in on the action, thus reinforcing the sentiment in a given direction. It’s when the sentiment goes into balance that we see the market get choppy and price get trapped in “aimless drift” i.e. NOISE. Attempting to trade in this meaningless low-probability price action can trigger you into all kinds of bad trade entries that simply don’t have any reason to follow through. When all is said and done, I found that the ability to DETECT and SUPPRESS market noise is the key to more Profitable Trading.
The Dynamic Trigger Range – Building A Better Mousetrap
It turns out that detecting market noise can not only help keep us out of more failed trades, BUT it also automatically BY DEFAULT – LEADS US DIRECTLY TO THE HIGH MOMENTUM BREAKOUT LEVELS in the market. This was an amazing secondary effect that I discovered related to suppressing the noise. The key to making this work was developing a brand new ALGO I named “The Dynamic Trigger Range”.
The Dynamic Trigger Range computes a high and low price level which auto adjust in response to internal market price movement. The EDGES of the Dynamic Trigger Range represent the level where we can expect a HIGH PROBABILITY BREAKOUT Attempt to occur in the direction of a TREND that is either underway or just getting started. As price crosses this “TRADE – PRICE BARRIER” you are presented with a TRADING OPPORTUNITY based on the fact that price now has a High Probability of ACCELERATING in that DIRECTION after crossing the barrier. The new strategy works by adaptively monitoring dynamic market price boundaries where the market has a high likelihood of breaking out and exploding into large-scale Trending moves. This is the breakthrough formula I developed which I named the “Dynamic Trigger Range”.
The Power E-Mini Desktop Alert Software – What Is It?
The Power E-mini Alert Software is a totally unique stand-alone Windows program that receives Emini Trading Alerts directly from my Automated Momentum Breakout System which in turn is based on the Dynamic Trigger Range described in this article. It is a Mechanical, High-Point Scoring System, specifically designed for day trading the S&P E-mini futures market now with ES, NQ, CL Trading Alerts. It comes complete with Online User Documentation covering all the important details you will need to know and understand in order to get started and successfully trade along with the system. It’s Super Easy To Follow.
You simply plot two horizontal lines on a basic 1-Minute Emini bar chart at the high and low to maintain as VISUAL REFERENCE points for price action. The Dynamic Trigger Range formula is designed to pinpoint with great precision the EXACT PRICE LEVEL where the next MAJOR PRICE BREAKOUT and Multi-Point Impulse move will occur from either Long or Short. Conversely you can think of INSIDE THE RANGE as a NO-TRADE ZONE. This helps you simplify your trading approach on being able to always know the breakout boundaries and the no trade zones. The Alert Software is designed to give you ample audio/visual warnings and alerts as price gets closer to the Dynamic Trigger Range Barriers. This is an Institutional Grade System.
The Momentum Breakout System works – simple as that. Anytime there is a significant move in the market, the system catches it – guaranteed – due to the very nature of the Dynamic Trigger Range which casts a net around the current price. Knowing when NOT TO TRADE is half the battle. The system avoids market noise and lets us know precisely when and where the price can break free of entanglements and go on to make a significant impulse move. The software Alerts, combined with our Delta Neutral Trading Strategy is a winning combination. Give it a test-drive for a month and convince yourself that this system is right for you.