If using moving averages as an indicator worked, every fund with a main frame computer would beat the index they follow, when in actuality, less than 10% can do that.
The newbie always focuses on the big moves, on making big profits, and the breakouts seem to offer the perfect get-rich-quick scheme they are looking for.
A trader focuses on risk first. The only measure of profits in the trader's equation and plan is the profitability ratio to risk. A risk/reward ratio of 2:1 must exist before any trade can be taken. The high momentum breakout trade seems to match this criteria for the newbie. But the newbie does not know how to calculate risk, and isn't concerned with risk, because he can see perfectly in hindsight what to do.
Again, the successful trader is looking for low risk, high probability trades. The breakout trade is the highest risk of all setups, and has one of the worst probabilities of success. But the newbie sees right away that you make a lot of money when you're right, correct? False breakouts are legend. The missed breakouts are legend. You might catch one some day.
You should be looking for consistency, not get-rich-quick schemes. When you can call yourself an advanced trader, you might want to look again at breakouts. You are missing the whole point of trading, which is good trading strategy, not some indicator.
Answered a similar question here:
http://answers.yahoo.com/question/index?...
Beginner stock trader here. I've been playing around with incredible charts and really love the program. Although one thing I've been struggling with is creating good scans. I'm looking for break outs coming out of consolidation, to be traded for approx 1-3 weeks (short term).
Attached is my current scan, it almost never yields breakouts. Can anyone recommend to me good criteria to use in a breakout scan? Also, is there anyway to use specific time periods? many of the default periods from the drop down menus are not quite suited.
http://imgur.com/d7bGOlF
