Different types of trades work in difference types of market environments.
If the sentiment is very bullish- Breakout trades would work at its best in the initial phase. This is where the trend must be reversing and short covering starts. Pullback traders might keep on waiting for a pullback which unfortunately doesn't come and BO traders make money. In the later part pullback traders have their opportunities but not many as the trend would be slowing down. BO traders would start losing.
If the sentiment is moderately bullish- the BO traders would lose money as they won't get their 1:2 or 1:3 so easily. Pullback traders will make money for quite a time. BO traders will make money near a top but not for long as the trend might climax and ultimately reverse.
What it means is that different type of traders make money in different type of markets as you can't be both BO and pullback trader. It could be disastrous.
If the sentiment is very bullish- Breakout trades would work at its best in the initial phase. This is where the trend must be reversing and short covering starts. Pullback traders might keep on waiting for a pullback which unfortunately doesn't come and BO traders make money. In the later part pullback traders have their opportunities but not many as the trend would be slowing down. BO traders would start losing.
If the sentiment is moderately bullish- the BO traders would lose money as they won't get their 1:2 or 1:3 so easily. Pullback traders will make money for quite a time. BO traders will make money near a top but not for long as the trend might climax and ultimately reverse.
What it means is that different type of traders make money in different type of markets as you can't be both BO and pullback trader. It could be disastrous.
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