Potential & Breakout trading--Technical tips and tricks

[l3xm4rk]

Hey tech - thanks for the clarification.

So if the low volume, tight range isn't a signal (it can't be a signal if you can't confirm it until the following day), then how do you know when to top up?

I.e. in the example posted above - at what price point did you top up?

 

[tech/a]

I look for trading above the high of the signal bar.
Ill add close to close if its still above the signal bar.

Spot the signal on SDL on 31/12

Extremely low volume
Tight Consolidation
Within 5 Bars
Followed by an up day.

 

[Lone Wolf]

If you wait for the close of the next bar to confirm lack of supply, there's a chance you'll miss the breakout, or at least have to get in with a wider than desired stop. How far are you willing to chase the price above the breakout? Would it be better to place a buy order at the breakout point, then if you don't get confirmation on the next bar, either remove the buy order, or kill the trade if triggered by the confirmation bar being a false break? Or do you get a better win/loss ratio by actually waiting for confirmation bar to close?

Of course you can adjust the trade size to suit the stop level, but even if we get confirmation there's still no guarantee that price will go our way. You obviously believe in waiting for confirmation, but just out of interest, have you ever compared the results of tight stops vs. waiting for confirmation?

 

[tech/a]

If you wait for the close of the next bar to confirm lack of supply, there's a chance you'll miss the breakout, or at least have to get in with a wider than desired stop. How far are you willing to chase the price above the breakout? Would it be better to place a buy order at the breakout point, then if you don't get confirmation on the next bar, either remove the buy order, or kill the trade if triggered by the confirmation bar being a false break? Or do you get a better win/loss ratio by actually waiting for confirmation bar to close?

Of course you can adjust the trade size to suit the stop level, but even if we get confirmation there's still no guarantee that price will go our way. You obviously believe in waiting for confirmation, but just out of interest, have you ever compared the results of tight stops vs. waiting for confirmation?

Its actually not my belief.
Williams and Wychoff both advocate that you cannot know if the bar is lack of supply without the next bar showing the way.
I agree.
I also agree with you that its not an Iron clad guarantee that price will continue for ever in the direction of the next bar.
Personally I find adjusting size to stop level the more comfortable and consistent for myself.
I'm a believer of hopping on train lines and anticipating the train moving almost immediately---if its already moving---even better.

 

[daki]

Daki
I use Metastock,and Tradeguider EOD.
but any trading platform would suit.

Boggo
I would have rejected it as well.
we wont get them all but we will get enough.
3rd losing day in a row.
Doing some culling and buying.

Thanks mate, appreciate that.

 

[daki]

Daki
I use Metastock as my primary platform and I run two seperate scans my own breakout that I built which picks up potential breakouts and a Turtle breakout that identifies breakouts over a 20 day period.

I also use MTPredictor EW software which is excellent for EW analysis and will start to kick in again as soon as this market starts to turn up. It works really well at picking up stocks that are in an overall trend and have just had a correction.

I have also got Amibroker and Dynamic Trader but I rarely use either.

Its not the platform that creates the opportunities, its what you do with it and to do anything with it you need to know what you are looking for first and then knowing how to manage it when you find it.




tech/a
It probably would have failed your "eyeball test" too I suspect.
I am very happy with what I am getting too, plenty just in the ASX 300 alone.

One more negative day will trigger a few stops for me but I do like the opportunities that pop up after a few negative days.

Thanks boggo, good explanation. Looking for platform that I can program for, I've been involved in MT4 programming for FX, would like to convert the skills over to some of the stocks platforms and see what we can come up with . I've been using Etrade interactive charts for a while but they are really pain in the butt, and FX isn't very good to trade at the moment as stocks are performing better, so I thought of a little switch as a refresher

 

[tech/a]

Thanks mate, appreciate that.

For trading I use Tradguider R/T.

 

[joea]

I look for trading above the high of the signal bar.
Ill add close to close if its still above the signal bar.

Spot the signal on SDL on 31/12

Extremely low volume
Tight Consolidation
Within 5 Bars
Followed by an up day.

Hi. tech/a
This particular pattern is similar to that described as a "3 in one" in Jeffrey Kennedy's
"How to use bar patterns to spot trade setups."
I down loaded it from elliott wave international for free.
Cheers

 

[tech/a]

Hi. tech/a
This particular pattern is similar to that described as a "3 in one" in Jeffrey Kennedy's
"How to use bar patterns to spot trade setups."
I down loaded it from elliott wave international for free.
Cheers

Hmm
Didnt know of him.
always looking for other exponents.
Do you have the link.
Does he have any other publications

Better still how do I contact him?

 

[joea]

Hmm
Didnt know of him.
always looking for other exponents.
Do you have the link.
Does he have any other publications

Better still how do I contact him?

Google "how to use bar patterns to spot trade setups" and download pdf.
joe

 

[Boggo]

Google "how to use bar patterns to spot trade setups" and download pdf.
joe

Been away since yesterday morning so I have missed a bit including some of my stops getting hit and the breakout on GXY this morning
https://www.aussiestockforums.com/forums/showthread.php?t=20906&p=602918&viewfull=1#post602918

Had a quick look through that joea but there doesn't seem to be any value place on volume association, interesting though nonetheless.

 

[Frank D]

Don’t be fooled by volume analysis on its own, unless it has been optimized
with a ‘known pattern’

The most robust ‘known patterns’ are, either price rising up from support or a
breakout from consolidation

Most of those patterns are helped by higher timeframe analysis, and ‘Time’ being
the arbiter of the set-up.

If you a looking for BTA to continue from the breakout:- 1.03-109 becomes
support…

first target @ 1.39.

Because it’s a breakout of the first month of the Quarter, the up trend can run for
the next 3-months until the next Quarter….

Along the way it will have minor dips during the current Quarterly cycle, normally
after the following monthly highs are reached ( February), or 1.39.

 

[tech/a]

Good tip Frank.

Any analysis used in isolation will have limited value.

I will point out though that VSA is by its own admittion limited to 3-5 periods for validity.
Regardless of periodicy.
Having used it for some years I have to agree.

Interesting BTA I hold it.

 

[Frank D]

TLS:- Monthly and Weekly

Telstra is another example of using support or breakouts.

You either want to Buy support using 2.72 by validating it (next day’s trading)

Or you are buying the breakout, as ‘time’ provides the known
pattern :- Weekly breakout ($2.81)

2.81 Now becomes support.

You don’t want to see this week closing below 2.81 (fake break)

Target 2.93/2.96:- known resistance.

if it clears $2.96 ,then it has a Primary cycle that finally turns bullish, as it will
be above the Yearly 50% level.

 

[lindsayf]

Not trading stocks at the moment but enjoying this thread.

RRS daily

Nice breakout and has now retested the breakout level on reducing volume. Fairly classic price action - does VSA support this trade?

Lindsay

 

[tech/a]

VOLUME SPREAD ANALYSIS

Looks at each bar relative to every other bar and should be read in conjunction with
other analysis such as support and resistance as you have pointed out.

It is a method of understanding the movement of those in the market so that we can make better informed decisions about Buying/Selling/or holding.

The landscape changes from bar to bar and as each bar tells us something (Even if its nothing).The life of a SINGLE bars in VSA analysis is short 3-5 periods----by which time other bars will have impact.

Of course groups of bars are an important analysis tool in VSA.

So in answer to your question---yes VSA supports RRS and ALL charts.

The chart below is RRS (Tradeguider)
You'll note it has indicated weakness by the RED Triangles and at support (Yesterdays bar) We have an alert in Green awaiting confirmation (Thats why its not a triangle).
There are commentaries attached to each triangle which I have not opened or attached you can only open one at a time not leave all open.

 

[sparfarkle]

Gday tech,
Great thread.I wonder if a couple of points could be cleared up.
Firstly looking at a daily chart of GGG,(i havent mastered how to post a chart yet),the bar of 1/10/2010 i assume would be a signal bar as the following bar was an upday but would your stop loss have been triggered on 5/10/2010 with an intraday breach or do you act on eod signals which would have kept you in the trade?
Secondly,with regard to RRS,would yesterdays bar be considered a buy signal,i'm a little
confused as to your definition of ''Tight consolidation within 5 days'',do you mean it needs to have consolidated for 5 days,or it needs to be a small range day and the signal will be validated within 3 to 5 days?
Hope i've made sense,

Sparfarkle
I'll see if i can post GGG chart

 

[tech/a]

Sparfarkle.

Im seeing some dangerous confusion.
No that would NOT be a signal.
You need to go back over the post and have a good look at what is written.

I have only mentioned the EXTREMELY LOW VOLUME down bar is a small tight consolidation as something to LOOK FOR if in a Breakout trade AND the stock takes a breather with a small tight consolidation---NOT AS A stand alone buy signal.

RRS could be a buy signal for a Mean Reversion Trader but in the context of these posts only has relevance as Support holding.

Sorry to be harsh but take the time to absorb!!

 

[Boggo]

Daki

I also use MTPredictor EW software which is excellent for EW analysis and will start to kick in again as soon as this market starts to turn up. It works really well at picking up stocks that are in an overall trend and have just had a correction.

Daki
An example below of the type of setup or pattern that I was referring to in part of my answer to your query (above).

Sorry tech/a, off the thread topic a bit but just thought I would display what I meant in my earlier response.

(click to expand)

 

[white_crane]

Here is a trade that did not work out for me that I and others may be able to learn from.

My thoughts/reasoning:
I bought in at 98c (stop set at 92c - Tuesday's low) on Wednesday after it broke out on Tuesday on high volume.
After viewing the chart that afternoon, I decided to sell based on the down bar, closing on it's low.
It sold today at 93c before my stop was hit.

So what did I do wrong? Any advice/comments/constructive criticism would be appreciated.

N.B. I can only trade EOD.