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  1. #1
    FXCM Expo is offline Moderator
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    Thomas Long - High Probability Breakout Trading in the Forex Market

    This video has been moved to http://www.FXCMExpo.com. For all of Tom Long's videos Click Here.



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    Thomas Long looks at an approach to identifying trade entries that has been used successfully by some of the most famous traders of all time. He first explains what identifies a breakout and then discuss some of the methods used by those traders who have been successful. This presentation is designed for those traders who are looking for ways to expand their understanding of trading in an attempt to improve their overall results.

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    Last edited by FXCM Expo; 11-30-2010 at 02:14 PM.

  2. #2
    29a
    29a is offline Member
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    excellent presentation Tom, much appreciated.
    Do you still use the Donchian Channels ?
    If you do, do you still use the 20 day on daily and 55 period on 4 Hour ?
    If I was to to attempt to go further on to a 1 hour chart what do you think would be a good setting ?
    or do they not work reliably on the smaller time frames ?

  3. #3
    Thomas Long's Avatar
    Thomas Long is offline DailyFX Power Course Instructor
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    Quote Originally Posted by 29a View Post
    excellent presentation Tom, much appreciated.
    Do you still use the Donchian Channels ?
    If you do, do you still use the 20 day on daily and 55 period on 4 Hour ?
    If I was to to attempt to go further on to a 1 hour chart what do you think would be a good setting ?
    or do they not work reliably on the smaller time frames ?
    Thanks....all technical analysis works better on long-term charts than on short-term charts, but the hourly can still be reliable if trading in the direction of the trend on the daily chart. I try many combinations, but find that the 55 period also can be good for the hourly chart. I do often have Donchian Channels on my charts as they are great for trend traders.
    Enroll in our online DailyFX Course today and get personalized instruction from our team of expert traders 24 hours a day. We have taught over 25,000 students and in our online courses in the past. The new DailyFX Course has nearly 600 minutes of content delivered via video so you can learn at your own pace. Join the instructors in live webinars where they will show you how to use the highlighted tool in current market conditions. Click here to get more information.

  4. #4
    Franosh's Avatar
    Franosh is offline Member
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    Hi, Thomas

    A great video. Thanks for posting. FXCM should perhaps place such threads in a more prominent place. I just found out your video this afternoon.

    You mentioned that you also went through that transition from trying other methods to your current trend trading style. Do you feel/think if there was any significant psycholgoical adjustments or transition that you had to go through? Some people naturally find trend trading difficult psychologically and are more comfortable in trading reversals or patterns. And some pros even actively discourage breakout trading for its high risk and advocate trading reversal points. I know some major i-bank traders also trade reversals and pattern completions.

    Breakout trading can be psychologically difficult to many, I guess, because it might feel rather uncomfortable to get in a trade when the 'trend' has already moved away and the train has already left the station, and one is not supposed to chase a trade, as we are all taught. I have thought about this a lot, and it appears to me that breakout trading might seem natural and feel comfortable only to those who are comfortable with, or are not afraid, jumping in a trade halfway through or chasing a leaving train. And for some or many others, waiting for the end of one leg in order to get in for the other leg is a more natural psychological state. I've noticed that you are a keen advocate for trend trading on daily. So, I would like to know if you may share how you made the transition from your previous trading to this style of trading?

    You said you used to work in Chicago. Did you work in CME? Have you been a pit trader?

    Many thanks

    Franosh

    Edit: in addition, you seem to like exotic crosses. But on majors where it's trending less, do you find such methodology a bit more difficult?
    Last edited by Franosh; 11-05-2010 at 07:05 PM.

  5. #5
    Thomas Long's Avatar
    Thomas Long is offline DailyFX Power Course Instructor
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    Quote Originally Posted by Franosh View Post
    Hi, Thomas

    A great video. Thanks for posting. FXCM should perhaps place such threads in a more prominent place. I just found out your video this afternoon.

    You mentioned that you also went through that transition from trying other methods to your current trend trading style. Do you feel/think if there was any significant psycholgoical adjustments or transition that you had to go through? Some people naturally find trend trading difficult psychologically and are more comfortable in trading reversals or patterns. And some pros even actively discourage breakout trading for its high risk and advocate trading reversal points. I know some major i-bank traders also trade reversals and pattern completions.

    Breakout trading can be psychologically difficult to many, I guess, because it might feel rather uncomfortable to get in a trade when the 'trend' has already moved away and the train has already left the station, and one is not supposed to chase a trade, as we are all taught. I have thought about this a lot, and it appears to me that breakout trading might seem natural and feel comfortable only to those who are comfortable with, or are not afraid, jumping in a trade halfway through or chasing a leaving train. And for some or many others, waiting for the end of one leg in order to get in for the other leg is a more natural psychological state. I've noticed that you are a keen advocate for trend trading on daily. So, I would like to know if you may share how you made the transition from your previous trading to this style of trading?

    You said you used to work in Chicago. Did you work in CME? Have you been a pit trader?

    Many thanks

    Franosh

    Edit: in addition, you seem to like exotic crosses. But on majors where it's trending less, do you find such methodology a bit more difficult?
    These presentations have their own website at FXCM Digital Expo.

    The biggest adjustment I made since becoming consistently profitable is to not try to get rich overnight. Strange as it may sound, practicing discipline and patience is a common trait among profitable traders. It sounds simple, but in reality is very difficult for most new traders. I find it easier to just try to be profitable every month rather than focus on how much I can make. I prefer to focus on how much I can lose and let the profits happen.

    The thing about looking for reversals is that you then try to predict what the market will do and when it will do it. That is adding an additional step that can go wrong and trading is already uncertain, so why add an additional step. Trading with the trend is being in tune with what the market wants to do and just simplifies the trading process. Simple is always better as it has a better chance of withstanding the test of time.

    When trend trading you have to get past the thought that there is a limit to how high or how low a market can run. The market doesn't have such issues, so why should the trader? It is just a matter of opening up your mind to the possibilities of what a market can do instead of limiting those possibilities. It does take blind faith. When the market is at an all-time high and pulls back, it is a buying opportunity. The fact that some traders have issues buying at this time is really just the trader's issue and not the market's. Once you get past this and detach yourself from the outcome of any one trade, it becomes easier. You will be wrong at the end of the trend, but trends in the FX market last a long time. Trading them is an advantage that we do not want to give to the other trader, but rather embrace it in our trading decisions.

    I worked off the floor both at the Chicago Board of Trade and as a bond trader for a bank on LaSalle St in Chicago.
    Enroll in our online DailyFX Course today and get personalized instruction from our team of expert traders 24 hours a day. We have taught over 25,000 students and in our online courses in the past. The new DailyFX Course has nearly 600 minutes of content delivered via video so you can learn at your own pace. Join the instructors in live webinars where they will show you how to use the highlighted tool in current market conditions. Click here to get more information.

  6. #6
    Kos3 is offline Registered User
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    SL setup & pyramid

    Hi Thomas,
    as you said, you dont use fixed SL but trailing stops. Iam curious about your setup – do you only set a trailing stop in relation with ATR or u move your SL at first to break-even and then safely behind S/R zones that occur?

    And my next question, do u use some kind of pyramiding? I mean, proper pyramiding, not some hazard martingale systems. I read some articles, that clever pyramiding – adding to your profit position can help your account significantly. – “Jesse Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one’s position as it goes in the right direction and cutting losses quickly.”

    Thanks for your advice

    Peter “Kos3″

  7. #7
    DailyFX is offline Moderator
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    Quote Originally Posted by Kos3 View Post
    Hi Thomas,
    as you said, you dont use fixed SL but trailing stops. Iam curious about your setup – do you only set a trailing stop in relation with ATR or u move your SL at first to break-even and then safely behind S/R zones that occur?

    And my next question, do u use some kind of pyramiding? I mean, proper pyramiding, not some hazard martingale systems. I read some articles, that clever pyramiding – adding to your profit position can help your account significantly. – “Jesse Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one’s position as it goes in the right direction and cutting losses quickly.”

    Thanks for your advice

    Peter “Kos3″
    Hi Peter…trailing the stop can be accomplished through a variety of methods (ATR, opposing price channel, horizontal support/resistance, fixed trailing stop). Each has their own characteristics that makes it useful so the method you select really boils down to personal preference. Personally, I like the opposing price channel or horizontal support/resistance as I find those ‘easier’ to identify on a chart. Therefore, I can manually adjust the stop from the marketscope charts which saves me a step.

    We get the question about adding to positions quite often. The only instance where I would recommend adding to a position is if the position is floating a profit. You want to put your capital towards those ideas that are working rather than adding to losing positions. If you decide to add to winning positions, have a plan on when and at what price you want to add more positioning. Make sure you are risking less than 5% of your total balance on ALL open positions for all currencies.

    Happy Trading!

    Kindest Regards,

    Jeremy Wagner
    Team Lead
    DailyFX Education
    Instructor@dailyfx.com

  8. #8
    sharpo is offline Registered User
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    Quote Originally Posted by Kos3 View Post
    Hi Thomas,
    as you said, you dont use fixed SL but trailing stops. Iam curious about your setup – do you only set a trailing stop in relation with ATR or u move your SL at first to break-even and then safely behind S/R zones that occur?

    And my next question, do u use some kind of pyramiding? I mean, proper pyramiding, not some hazard martingale systems. I read some articles, that clever pyramiding – adding to your profit position can help your account significantly. – “Jesse Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one’s position as it goes in the right direction and cutting losses quickly.”

    Thanks for your advice

    Peter “Kos3″



    is a great way

    http://www.utelio.it/cambio-euro-dollaro.php
    Last edited by sharpo; 11-07-2011 at 08:55 AM.

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