breakouts and limit orders

[ampris2000]

if you are waiting for a breakout, how many pips away from the support/resistance area should the limit order be placed?

the reason i'm asking is because I can see where a breakout may occur, but sometimes i have placed my limit order too close.

as a result it is triggered by a small movement and price moves in the opposite direction.

thanks.

[SoundFX]

Ampris,

I'd say that depends greatly on what time frame you're using and the width of the range from which you're breaking out, as well as which pair you're trading. For instance, a GBP/JPY would require more breathing room the the USD/CAD.

Typically, on 5M chart breakouts for GBP/USD, I like a stop 11 pips away from either end of the range, less in the EUR/USD, etc.

-SFX

[liquidrock]

limit orders are a great way to trade forex. use support and resistance levels to determine where your limit order should be. resistance for short and support for long orders.

the stop loss should also be based on support and reistance levels as i feel they are and should be dynamic in my opinion. some people use a set stop loss using a set value.. i.e. 35 pips, and they do well. hope this helps.

[outofdebt]

I have the opposite problem : I place limit order too far away. I take the most extreme candle on 1 hour chart of s/r zone and enter 15 pips beyond that.

If it happens to be near another support/resistance (ie. trendlines, 100 ma or 200 ma, fibs or round numbers, etc... )I'll stay out until price has stronger breakout.

Also, if it doesn't stay past s/r for 15 min. I get out and re-enter later if there still is a clear direction.
However, I get in too late a lot and miss most of the moves