Breakout and pullback technical setup

[weird]

Good for you. And you might have done even better if you'd shorted some of the plunging stocks or bought some put options

As a mechanical trader, I think it is pretty hard to program such conditions, most TA indicators are just too lagging. Find one that works for providing usable market assessment before its already done, PM me !

Short-term trading using daily data, long and short still works, but the volatility may cause problems with the distance of stops. Long systems, if developed on extreme bullish behaviour still work, but the trades are fewer. Using intraday for day-trading is a different story.

Discretionary trading is probably better here, as a potentially much sharper sword. The problem is, having the skill to wield it !

 

[bunyip]

As a mechanical trader, I think it is pretty hard to program such conditions, most TA indicators are just too lagging. Find one that works for providing usable market assessment before its already done, PM me !

Short-term trading using daily data, long and short still works, but the volatility may cause problems with the distance of stops. Long systems, if developed on extreme bullish behaviour still work, but the trades are fewer. Using intraday for day-trading is a different story.

Discretionary trading is probably better here, as a potentially much sharper sword. The problem is, having the skill to wield it !

Fair comments.

Lagging TA indicators don't pose any problem in my case......I don't use indicators.

 

[tech/a]

By "The above is the beauty of TA", I meant that there is not just one interpretation of what type of trade it is

So did/do I

 

[bunyip]

Albi

I notice that you have no less than four indicator below you CNT chart. Do you use all these indicators as a matter of course in your trading?

I used to be an indicator junkie but over the years I came to regard indicators as about as useful as boobs on a beetle. Most of them are momentum based and they simply move in accordance with the price action. You might as well take off all the indicators and just focus on the price action itself.
And most of the indicators, if they're momentum based, are just overlapping each other, more or less duplicating each others movements.

I just don't see that they add anything of value to your analysis. About the only use I can see for indicators is if you incorporate one of them in your scan criteria.
For example, if you're setting up a scan to find uptrending stocks that have pulled back temporarily, but are now resuming their trend, you could scan for.....
* Price is above 30 & 50 day EMA's.
* 7 period Slow Stochastic %K crosses above %D.

This scan would be giving a buy signal in MYO.
You could add a volume component to the scan if you want..... e.g. today's volume is at least 50% higher than yesterdays volume.

 

[albi000]

Hey Bunyip

I have been looking at the ZeroLag indicator recently which is why it has been added to may layout (its not usually there).

The layout I use to build up a list of trade-able candidates consists of only a 10MA, 30EMA, 200MA, Volume and 30 EMA of volume.

Once I have built up a small list candidates (short and long) I then switch to this layout just to view other indicators just out of habit (maybe to confuse me some more). I usually only pay attention to ADX above 20 and ADX below 40.

My Scan is as follows.

Filter =
H <= Ref(H,-1)
AND Ref(H,-1) <= Ref(H,-2)
AND (MA( Close, 10)) > (EMA(Close,30))
AND Close >= (EMA(Close, 30))
AND Close <= (MA(Close,10))
AND ADX(14) > 20
AND Close >= (MA(Close,200))
AND (MA(Volume,60)) >= 50000
AND Volume > 0
;

I have switch all my '>' and '<' from my original scan to use '>=' and '<=' recently. This brings up a lot more charts that don't fit a pullback criteria but adds a few opportunities the original misses.

Albi

 

[bunyip]

Hey Bunyip

I have been looking at the ZeroLag indicator recently which is why it has been added to may layout (its not usually there).

The layout I use to build up a list of trade-able candidates consists of only a 10MA, 30EMA, 200MA, Volume and 30 EMA of volume.

Once I have built up a small list candidates (short and long) I then switch to this layout just to view other indicators just out of habit (maybe to confuse me some more). I usually only pay attention to ADX above 20 and ADX below 40.

My Scan is as follows.

Filter =
H <= Ref(H,-1)
AND Ref(H,-1) <= Ref(H,-2)
AND (MA( Close, 10)) > (EMA(Close,30))
AND Close >= (EMA(Close, 30))
AND Close <= (MA(Close,10))
AND ADX(14) > 20
AND Close >= (MA(Close,200))
AND (MA(Volume,60)) >= 50000
AND Volume > 0
;

I have switch all my '>' and '<' from my original scan to use '>=' and '<=' recently. This brings up a lot more charts that don't fit a pullback criteria but adds a few opportunities the original misses.

Albi

Fair enough Albi....thanks for the reply.

I'm a 'simple is best' man myself. I look for a brief retracement in a trending market, then the appearance of one of the candlestick reversal patterns to indicate that the retracement is finished and the trend is about to resume.
The trade has good profit potential if the trend does resume, but strictly limited loss potential due to my stop loss acting as a safety net if the trade goes against me.
I particularly like it when one of these candle reversal patterns shows up after the market has retraced to the vicinity of support/resistance, or to one of the Fibonacci retracement levels.
The trend resumption can be quite impressive when you get a bounce off one of these levels.

I also sometimes look for a chart pattern that has a good track of preceding explosive moves. A short consolidation in a strong trender is one such pattern. This pattern is characterised by 4 or more days of sideways price action within a strong trend. The sideways days have small ranges and the tops and bottoms of each of the days is at similar levels to all the other days.

After roughly 4 to 10 days of this tight range sideways action the price will tend to break out in the direction of the trend. And the breakout is frequently explosive.....ideal for bought option plays. Just make sure you have a contingent order in place to buy the option immediately the stock trades a few cents outside the consolidation, in the direction of the trend.
No point waiting till the end of the first breakout day....by this time the stock might have moved 5 or 6%, with a corresponding increase in the option value of anywhere from say 25 to 50%. You just can't afford to miss that much of the profit on offer, which is why you want to buy the option very shortly after the breakout begins, rather than wait a full day.

Back in the days when I traded stocks and followed hundreds of charts, I used to run scans to find setups for me.
These days I focus mainly on the Forex market, with an occasional options play on US stocks.
With only 10 or so Forex charts to look at, I prefer to just eyeball each chart to find the setups, rather than running scans. Takes me only 10 or 15 minutes each day.

 

[wildkactus]

Exit on cross of which MA's - which period and what type (simple MA, EMA)?

Bunyip,
The exit is on the reversal of the original cross,
The period's I use are 5 close, 21 close.
They are just simple ma's.

 

[bunyip]

Bunyip,
The exit is on the reversal of the original cross,
The period's I use are 5 close, 21 close.
They are just simple ma's.

Righto kactus, thanks.
I'll have a look at the 5/21 crossover to see if I think it has any merit as an exit strategy in the Forex market.

It's good to hear what other traders have in their arsenal of trading weapons.
Thanks for sharing this.

 

[tech/a]

Thought Id just follow up on my opinion of MYO.

This is a 120 min chart.
Notice the Bars with massive volume.
This to me is selling---WHY?
Because the subsequent bars are showing no demand----volume in BOTH casaes volume totally dries up.
Within 2 bars------price falls.

 

[BBand]

Hi Tech,
Appreciate the explanation of bar volume.

I have come across a note which I intended following up on and this may be the time to do it. - Its a strategy that I read somewhere: ----

Net buy volume trading strategy
If you can find strong divergencies in net volume and price, it can usually hint at pro traders accumulating stock

For instance,
If on one day 5mil shares are bought at the ask price
and 3 mil shares are sold at the bid
The net buy volume (NBV) is 2 mil shares.

Naturally , since the NBV is positive - you would expect to see the stock trending up on that day.

However, if you see the stock trending down or flat lining on that day, then you have spotted a valuable divergence.

This kind of divergence usually occurs when professional traders (who want to accumulate stock) hammer the bid with sell orders whenever the stock tries to run up.

Then they place buy orders to catch all the shares that nervous retail traders are selling

It never hurts to buy the same stocks as the pros.

Query
Do you or anyone know where I can obtain the number of shares bought at the ask and the number of shares sold at the bid at a particular price level?

From memory (e*trade), Iress software gives the total number traded (bid +ask) at each price level

Could be useful for breakouts from congestion

Peter

 

[tech/a]

Pete

Not the first time this "idea" has been exploited.
Inside trader still sells it as a leading indicator and some here subscribed.
Some even posted charts and they were followed for a time.
The results like all analysis were mixed.
Dont know if anyone has found a consistently profitable application for this idea.

Here is the thread
https://www.aussiestockforums.com/forums/showthread.php?t=5924&highlight=Inside+trader

 

[BBand]

Thanks for that Tech,

Maybe I should just stick to my readily available info.

I have the " Master the Markets" book - one of the books on my re-read list,
I should go back and readup on re-tests (one of my setups is breakouts from stage one)

I used to suffer from information overload, its amazing how your emails tend to steadily increase as you subscribe to more and more info suppliers which you think will be of help - well now I have culled most of them and I have more time for what really counts.

I have also cut back on web sites which I used to visit regularly - now I only visit two, one of which is AFL (Only forum site)

You know what - I do not miss the excess which I culled.

Probably many AFL users could benefit by reviewing their "info" suppliers, and free up more valuable time.

Peter

 

[IFocus]

Fair enough Albi....thanks for the reply.

I'm a 'simple is best' man myself. I look for a brief retracement in a trending market, then the appearance of one of the candlestick reversal patterns to indicate that the retracement is finished and the trend is about to resume.
The trade has good profit potential if the trend does resume, but strictly limited loss potential due to my stop loss acting as a safety net if the trade goes against me.
I particularly like it when one of these candle reversal patterns shows up after the market has retraced to the vicinity of support/resistance, or to one of the Fibonacci retracement levels.
The trend resumption can be quite impressive when you get a bounce off one of these levels.

I also sometimes look for a chart pattern that has a good track of preceding explosive moves. A short consolidation in a strong trender is one such pattern. This pattern is characterised by 4 or more days of sideways price action within a strong trend. The sideways days have small ranges and the tops and bottoms of each of the days is at similar levels to all the other days.

After roughly 4 to 10 days of this tight range sideways action the price will tend to break out in the direction of the trend. And the breakout is frequently explosive.....ideal for bought option plays. Just make sure you have a contingent order in place to buy the option immediately the stock trades a few cents outside the consolidation, in the direction of the trend.
No point waiting till the end of the first breakout day....by this time the stock might have moved 5 or 6%, with a corresponding increase in the option value of anywhere from say 25 to 50%. You just can't afford to miss that much of the profit on offer, which is why you want to buy the option very shortly after the breakout begins, rather than wait a full day.

Back in the days when I traded stocks and followed hundreds of charts, I used to run scans to find setups for me.
These days I focus mainly on the Forex market, with an occasional options play on US stocks.
With only 10 or so Forex charts to look at, I prefer to just eyeball each chart to find the setups, rather than running scans. Takes me only 10 or 15 minutes each day.

bunyip have you ever looked at the Joe Ross 1-2-3 setup found here http://www.trading-naked.com/joe_ross_.htm in the Appendix A down the bottom

 

[bunyip]

bunyip have you ever looked at the Joe Ross 1-2-3 setup found here http://www.trading-naked.com/joe_ross_.htm in the Appendix A down the bottom

Indeed I have - I came across the 1 2 3 setup many moons ago.
You use it yourself with good results?

 

[bunyip]

Today's market action in MYO demonstrates how chancy it can be trading against the trend of the overall market. MYO was a good looking setup technically, except that the buy signal was contrary to the bearish trend of the All Ords. The trade, if you'd taken it, has subsequently failed.
Bear markets, as I previously stated in this thread, are an environment for buying put options, or shorting stocks or CFD's.
Yes, some people have made money by buying stocks recently, but in a bear market, the easier and bigger money is available by playing the short side.

 

[albi000]

Broken through support, recently tested and could fall further based on current prices. $3.28 an important level to breach.

This is not a recomendation but an illustration of risk and target prices using this tactic
Entry $3.34
Stop $3.48
Risk = $0.14
2xRisk = $3.06

 

[yonnie]

hi Bunyip,

I`ve read most of your posts and I admire your commonsense approach to your trading and life in general.

have been trading penny shares for about 10 years; buy @ 1.5 cent and sell @ 1.7 cents that sort of thing.
market tanked and volume dried up now.
want to add/replace to be able to trade in all market conditions.

was just about to get the Stan Weinstein book when I noticed that you have changed to trading mainly forex.

could you tell me why you made the change: better trends,
scaling back:easier to look at only 10 charts, better returns,
etc etc?

are you trading forex longer-term as you did shares?

not getting any younger (58) and prefer longer-term strategies myself. can imagine that the top traders would scale back, even if the returns would be a little lower.

wonder if shares are my future (more work) or the bigger markets like forex or liquid futures.

have you done any research regarding tradability of futures?

thanks for any response you care to make.

sorry, just realised that my post is not in the right thread........you can pm me if you want

 

[bunyip]

hi Bunyip,

I`ve read most of your posts and I admire your commonsense approach to your trading and life in general.

have been trading penny shares for about 10 years; buy @ 1.5 cent and sell @ 1.7 cents that sort of thing.
market tanked and volume dried up now.
want to add/replace to be able to trade in all market conditions.

was just about to get the Stan Weinstein book when I noticed that you have changed to trading mainly forex.

could you tell me why you made the change: better trends,
scaling back:easier to look at only 10 charts, better returns,
etc etc?

are you trading forex longer-term as you did shares?

not getting any younger (58) and prefer longer-term strategies myself. can imagine that the top traders would scale back, even if the returns would be a little lower.

wonder if shares are my future (more work) or the bigger markets like forex or liquid futures.

have you done any research regarding tradability of futures?

thanks for any response you care to make.

sorry, just realised that my post is not in the right thread........you can pm me if you want

Rather than go off-topic by discussing the pros and cons of Forex vs shares in this thread, I'll PM you instead.