教学

Anatomy of a Breakout (Orderflow)

I am sharing my current approach for trading breakouts, please share your opinion on the comments section so we can have a discussion.

Used Tools:

Number Bars (Footprint chart)
Liquidity Heatmap
Volume Delta
Volume
Support and Resistance
ATR

For bullish resistance breakoutz

we setup alarms that alerts us when price is 2 atr below the resistance
when alarm triggered we set to watch as price approaches towards the resistance
we expect higher volume and higher delta
advance on poc and value areas and especially positive readings on footprint on the upper side in terms of liquidity we spot a vacuum zone in the target direction right after the resistance for price to advance and Liquidity thinning just below the resistance (indicates sellers pulling orders)
as we breakout we spot a huge spike in the volume and delta indicating resting orders absorbed by the market buyer
to confirm we look for not thin prints in the upper side of the candle but a good value area indicating price is doing business over there
we wait for a confirmation candle with similar profile
see liquidity flip at resistance becoming support then enter
we also consider higher timeframe structure is it trending if ranging where is the range etc and asses volality in terms of is it increasing meaning there is enough volality for a breakout
For exit we target the end of the vacuum zone aka nearest liquidity or nearest market structure, or a reversal in orderflow.

For bearish support breakout

We set up alarms that alert us when the price is 2 ATR above the support.
When the alarm is triggered, we start monitoring closely.
As the price approaches the support, we expect higher volume and higher negative delta, with the POC (Point of Control) and value areas advancing downward.
On the footprint chart, we look for particularly negative readings on the lower side.
In terms of liquidity, we identify a vacuum zone below the support, indicating room for the price to drop, and observe liquidity thinning just above the support (indicating buyers pulling their orders).
As the breakout occurs, we expect a large spike in volume and negative delta, signaling that resting buy orders have been absorbed by market sellers.
To confirm, we look for no thin prints on the lower side of the candle and a well-formed value area below the support, showing that price is establishing value there.
We then wait for a confirmation candle with a similar profile and observe a liquidity flip where support turns into resistance before entering the trade.
We also assess the higher timeframe structure, determining whether the market is trending or ranging, and identify the location of the range if applicable. Additionally, we evaluate volatility to ensure it is increasing, indicating sufficient energy for the breakout.
For exit we target the end of the vacuum zone aka nearest liquidity or nearest market structure, or a reversal in orderflow.

Additional Notes:
S/R lines defined based on daily graph anti trend consolidation zones
we are not defining numeric tresholds because context matters

注释

Additinal Verification:
for a long breakout Short EMA of Cumulative Volume delta should be higher than the long ema, for example 5-10 both for the asset and the index, for short vice versa. for crypto we can take BTC as index.

注释

For Orderflow based exits finished auction with a large wick with thin prints at the trend direction after breakout considered a valid exit before price turns to consolidation or reversal

注释

A note on FOMO:
this strategy may miss a lot of opportunities that are actually profitable due to nature of the setup with rigid rules for clear breakouts and also might cause premature exits if the trend continues. However being conservative on entries and exits increases the probability of winning trades and locks the profits. This setup might be rare but as long as we set our alarms for hundreds of assets there is a good chance that we get a few trades per day.

Personal Note:
My previous approach on my indicators was catching every trend, now I am more focused on high probability setups, because now I believe our focus should be making money, rather than competing in the indicator market.

mertenes3