In this episode of Truth About FX, Walter talks about trade retouches and breakouts, and moving into different timeframes depending on your goals. Do you want to see a breakout on the daily? Do you feel like you’re missing out on your current trades?
You will also learn here a unique method called the “Acapulco Trade” — and, no, you are not actually going to trade in Acapulco — and how this can help you in finding breakouts.
Download (Duration: 03:22 / 3.85 MB)
In This Episode:
00:38 – false breakouts
02:12 – drop down
02:56 – Acapulco trade
Move to a lower timeframe. [Click To Tweet].
See if the market breaks through the zones and stay. [Click To Tweet].
Confirm what the market is still using as a spot in the chart. [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. Why do you wait for retouches and breakouts? Aren’t you worried that you are going to miss the breakout or something?
Walter: You know what, that is a really good question and the answer is yes, sometimes you will but what you’ll also miss are those false breakouts. If it is a false breakout, if they extend beyond the zone and then all of a sudden pulls back the next candle, that is like a false breakout.
If you add those two candles together, you might get like a really long tail, kangaroo tail or something like that which is, of course, a reversal signal on that support and resistance zone. What I prefer to see is for the market to break through the zones, stay beyond the zone for several candles, to close beyond the zones for several candles, and then come back down and touch it.
Does not matter if it is a bullish breakout or a bearish breakout, I would want to see the market blow through that zone which has repeatedly held the market, right? We are saying “Well, it’s not holding it now, it’s breaking through” and then to confirm that the market is still using that as an important spot in the chart.
It needs to come back and push of and then go all the way. I understand why people get upset and feel they are missing out because of what happens to the gold’s value. There is actually an easier way to do it.
If you are concerned about that, my suggestion is just move to a lower timeframe because, typically, like let’s say you see a breakout on the daily, you might see a retouch almost immediately on the one-hour.
What that means is you might not get that daily retouch for a long time but you might get that one-hour retouch within 24 hours or something like that. That is what I would say to do that if you really feel like you are missing out, maybe drop down to a lower timeframe.
Of course, you’re comfortable with it if you test it and all that but that is one way to get around that. The other one is there is a trade called the “Acapulco Trade”. I can give you some information on how that works in the shownotes of this episode.
Basically, the Acapulco Trade is what you just said which is when you are going to breakout, sometimes if you are trading a higher timeframe, it’ll take a while for it to come back and touch it and confirm the breakout. But, if you want to trade on a lower time frame, sometimes it happens almost immediately.
That is what the Acapulco is, it sorts of put that in the focus so that when you get that breakout and it comes back and touches it immediately, you have rules in place to actually set yourself up to that trade.
That is all what the Acapulco Trade is all about. Like I said, I’ll put some info, like a video, down in the shownotes so you can see what is it all about.
Hugh: Awesome! And I’ve seen that Acapulco Trade in action. It’s really simple and very powerful at the same time.
Walter: Cool! Glad to hear.
Hugh: Thanks for that, Walter.
Walter: Okay. See you, Hugh. Bye.