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I am very confused after watching these slides. AL mentions that in a trading range we have a 80% chance that BO will fail but it drops to only 50% when in BO mode. I have no clue what this means. If we are in a trading range let's say a parallel trading range how can we know that we are in a break out mode? Let's say we are trending up and then we have a pullback that grows in a trading range (20 or so bars) AL mentions at this point we have a 50% chance we can either go up or down, however if it's a trading range and we are at the top don't we only have a 20% chance that the BO will succeed? I believe there should be a separate video on this 😉
I'm starting my second time going through the slides and I am searching for a clear definition of what "Breakout Mode" actually means. I have just watched slide 08c where one of the sections is all about breakout mode yet I don't think Al actually defined it. I think, based on the slides, it's where you are in a trend and then you get a tight trading range of about 2-5 bars. I think in this case, there is a higher probability that the market will BO in one direction or the other.
If, on the other hand, any tight trading range continues on as a TTR beyond 10 bars then the probability of any BO succeeding drops as the likeliest scenario is more TTR.
As I say, not certain of this at all but it's all I can surmise so far.
Essentially breakout mode is when a trading range has been established, which has highs and lows defined. It is the "in between" period where prices are moving between the boundaries until there is an attempt to break out.
On the open BOM can be established a little more quickly.
Good trades to you!
