Potential & Breakout trading--Technical tips and tricks

[tech/a]

Cant see your attachment
Just give the code and date.

have a look at the characteristics of EGP
Thats a good breakout which you could place an aggressive low risk trade

 

[white_crane]

Re: Recognia Scan - SVL breakout

would like to know in particular, this one has a selloff day on the the high vol bar preceding the breakout, which is itself on lower volume. does this matter or not?

I don't see a breakout.

There is an extreme volume, high range, down bar followed by an inside bar and then a bunch of bars still ranging within the high and low of the first. The first bar is acting as resistance going forward.

 

[Chasero]

tech/a

Pls revisit NDO chart. Potential breakout?

Also, in regards to SVL.

I recall reading a huge option to exercise 20m shares or something in one of their financials.

That's why the price plummeted. The company can exercise the option?? Will try and have a look but it's a tad late now.

 

[PinguPingu]

Had ROC (ROC OIL COMPANY) on one of my too many watchlists at the start of Jan, just checked today..damn. Still, nearing a one year top.

Edit: SMX (SMS MANAGMENT) perhaps another potential one

 

[Chasero]

Happily trading KEY

 

[bailx]

Doing a little research into Chart Patterns and there Protential. Understanding that Fundermentals & TA's such as Volume Will always play an important part. But Is This theory always correct? That Chart Patterns such as Multible Bottoms will always Ascend and Protentially Break-Out. Where as a Multible Tops will always Decend and more Protentially Break-Down. I'm saying this because those two Patterns appear to be always destent too that theory.

 

[CanOz]

Chart patterns have limited potantial, like everything in life there is no sure thing. Thomas Bulkowski has done a heap of reseach on chart patterns, I have his book "Encyclopedia of Chart Patterns". His studies list the success and failure rates of hundreds of familiar patterns. Its considered the foremost study into chart complex chart patterns i believe.

Double tops and bottoms are actually quite successful in all time frames, especially if they are 'tall', but it depends on how you define the patterns. Its not as simple as defining a double bottom as two lows with a high in between.

Do some more research....

CanOz

 

[bailx]

Chart patterns have limited potantial, like everything in life there is no sure thing. Thomas Bulkowski has done a heap of reseach on chart patterns, I have his book "Encyclopedia of Chart Patterns". His studies list the success and failure rates of hundreds of familiar patterns. Its considered the foremost study into chart complex chart patterns i believe

CanOz

I probably must agree with you there, about the limited protential. Triangles & Wedges are a good example of that. I must admit i don't know this Thomas Chap. If i may ask does he state on the most successful pattern for predicting ( forcasting ) a stock movement. If so, do you care to share? I have always been interested.

.

 

[CanOz]

I probably must agree with you there, about the limited protential. Triangles & Wedges are a good example of that. I must admit i don't know this Thomas Chap. If i may ask does he state on the most successful pattern for predicting ( forcasting ) a stock movement. If so, do you care to share? I have always been interested.

.

CanOz

 

[bailx]

Thanks for the Heads Up! Diamond Bottoms, never heard of that one before sounds rare hard too find, does it look as good as it souds? Any E.g's

 

[chops_a_must]

This is an awesome thread. Well worth reading.

I've picked out some of the more important posts for me to comment on.

I've been asked by a few how I exit my discretionary trades.
As I trade breakouts I thought I would include it in this thread as I use both exits and time stops which are based around technical price and volume action.
Not only to exit but also a pre screening to select a stock for trading (as there are far too many breakouts to trade all of them.)

But also to monitor or manage a trade.
Why stay in a trade during a pull back?
Why sell a trade before its stop is hit?
Why add to a trade during an up move/consolidation/correction?

While I Dont profess to get it perfectly correct every time---I Dont----There is always the continued management of a portfolio both during a trade and often monitoring those trades that have been closed for re entry if the situation arises.

There are quite a few situations and as time permits Ill post them up with charts.
Here is the first and NUMBER 1 exit set-up!
Click to expand.

View attachment 40540

I welcome comments and hope this is helpful to fellow traders.

This is good point for discussion, as it shows the multiple ways to profit from breakouts.

For mine, that would then go on to a watch list, to see if it forms a potential breakout pattern to enter.

Breakout trading is one of the most popular forms of trading. My favourite for stock trading.I Dont use it at all for Index futures!!.

Breakout trading falls into 4 F'S once you take a trade.
The first 2 are similar and the sort of trades we want.
The second 2 are similar and the type of trades which frustrates breakout traders.
Both pairs need to be traded to maximise potential profit/loss both at the beginning and pointy end of a trade.
While I'm not going to spell out EXACTLY how I maximise each end there will be more than enough for you (If you think beneficial) to incorporate into your trading.

The 4 F'S
(1) FLY
(2) FLOW
(3) FLAT
(4) FAILURE

Below is a short discussion on the first 2 and accompanying charts.
These 2 F's provide the profit to your portfolio and the management of ALL 4 F'S will add a great deal to your expectancy over a number of trades.

CLICK TO EXPAND

View attachment 40590

View attachment 40591

Ill post up the other 2 (And the most important in terms of Trade and portfolio management) when I have some clear time.
I hope these hints on practical application of a trading method help those who share a passion for breakout trading like myself.

Very good.

And the philosophy behind breakout trading is exactly why it doesn't work for index/ futures trading.

We're looking for big, volatile moves in our favour. The statisticians would have a word for it.

But indices are different. No-one is going to offer a take-over of an index. Indices don't upgrade earnings by 150% etc.

I've paper traded intraday breakdowns based on bullish stock patterns, with success, but never put money on it. Different beasts that favour reversion.

Yeh somebody will read it here package it up in some glossy crap and it will be in India or China being totted as the next Big thing.

You know if anyone finds this helpful in their trading I would appreciate the feed back --- you can private mail me.
Interested in practical application stories.

No. It's written below.

Will crank this up again in the coming days.
But some initial food for thought.

ALL trends START with a breakout.

NOT ALL breakouts are EQUAL

There are breakouts everyday so how do we find those with greatest potential.

There are also many types of breakouts.

PRICE
VOLUME
TREND
PATTERN
SUPPORT
RESISTANCE

How often do we limit ourselves to opportunity?

And this gets to my stock trading philosophy.

When I came to this site I was just an average punter, putting money in fairly randomly.

Thanks to you tech, and many others I gravitated towards breakout trading because of my interest in CSG stocks, before they went gang busters.

From this, and upon reflection I guess I have developed my own methodology for breakout trading. It is discretionary, but has served me very well.

1) I visually select small and midcap stocks that have made or are near all time highs in an established uptrend.
2) I prefer stocks that are making money or have definite potential fundamentally.
3) I either buy the breakout or buy on confirmation of a likely breakout pattern.
4) I'm not worried about time so much, as my criteria naturally keep my trade rate down.
5) I'm looking at using breakouts to capture stocks in significant growth phases and trends.
6) I will scale in again repeatedly if patterns and breakouts continue.
7) My stop is initially based on established support, breakdown of pattern, moving to entry price or a lower low once into a trend.

So these gains are potentially open ended.

I also trade breakouts on below criteria.

1) Big caps that are giving bullish breakout patterns in an uptrend.
2) preferably aren't making all time highs. See below.
3) looking for targets at resistance upon breakout.stops on support, failure of breakout or entry price.

So these have a defined possible gain as well as risk.

I've also noticed that blue sky buys for big caps, are often unprofitable. And I know others here have developed systems that are actually profitable taking the other side of the trade.

So there are multiple ways to use breakouts to trade. Either as entries for longer term trend trading, or for your shorter term moves. Even on the short side.

Cheers.

 

[Boggo]

So there are multiple ways to use breakouts to trade. Either as entries for longer term trend trading, or for your shorter term moves. Even on the short side.

An example using my Turtle style breakout entry and exit system on a weekly chart of PMV.
Personally I wouldn't have taken trades 3 and 4 as my system needs a break above the high of the buy signal bar for entry.

Aside from a freeing up of funds it is an interesting comparison of buy and hold vs bailing out and being prepared to re-enter when (if ?) it turns back up.

(click to expand)

 

[rbgmauq]

Chart analysis helps to identify the support levels. and the rebound target level.s This sets up both a short-side tade, and later, lays the foundations for a trade from the long side to capture the rebound rally, and potentially the beginning of a new longer term uptrend.

 

[History Repeats]

Good thread tech/a and everyone else learned a lot and saw certain things that can incorporate to my trading and skills.

 

[Sfnssie]

I am a newcomer, would like to learn more from here.

 

[RobertoHood]

Hi everyone , here are some tips.....

1. Find a stock with high liquidity from the NZX50/ASX200 (1million ADV)
2. Ensure the stock in in a decent uptrend (Determine time frame)
3. Compare stock to NZX 50/ASX200 – Ensure there is an Upward trend correlation
Important to focus on just ONE stock for now.

Once pre requisites are confirmed, proceed to the next step.

1. Calculate the volatility on a daily basis for the stock in “$” terms
=Maximum (H-L, H-PDC, PDC-L)
2. Convert the “$” terms into a “%” value in relation to the stock
3. Find time frame to average the volatility (5,10,15,20 days etc)
4. Check chart for basic S/R level (Consider using different time frames together e.g MTF - Multiple time frames.
(#4 will be the key for our “Entry”)

From this information we can gather a few things;

1. We have found a high probability Market (Uptrend)
2. We have a found a high probability stock (3/4 Stocks follow the market)
3. Correlation between the two further confirms this
4. We know how much “$” the stock moves on a daily/weekly/monthly basis
5. We know what this means to the bottom line in % terms

Now we have all the information we need to pursue Proper Risk Management.

1. Consider what our findings of the stocks “volatility” are. Its telling us roughly how much cents/dollars our stock moves on a daily basis.

2. What if we were to multiply this number by 1.5? What would the results tell us? It would give us an anomaly figure. Which means, if the stock were to on any given day move this number or beyond, we would be outside the average, which put simply would imply the stock is currently behaving “outside” its normal behaviour.

Looking at the chart. Once we determine current support and resistance levels, we can then start to focus on our entry.
Look for an area where a breakout or further move can be confirmed based on previous movements.


I would be happy to answer any questions, and even give examples.

"One thing about the markets that can be said with 100% certainty is that markets trend beyond random"

 

[Wysiwyg]

I would be happy to answer any questions, and even give examples.

Okay, present a chart showing an entry for tomorrow and a defined exit!

 

[RobertoHood]

Okay, present a chart showing an entry for tomorrow and a defined exit!

Hey Wysiwyg,

I put this information up to help a new trader, and point them into maybe a different way of chart analysis.

This is the system i used when i started trading, which has since evolved into a new beast.

Just showing a different pathway and when i said i would help and give examples, i was suggesting the to Excel side of things and any question which arose from my post

And as for giving entries... well thats in my other post

 

[caxer566]

I would be happy to answer any questions, and even give examples.

"One thing about the markets that can be said with 100% certainty is that markets trend beyond random"

Hi there! New day trader here learning the ropes

Could you outline these terms to confirm my understanding

H-L
H-PDC
PDC-L

And any recommendation on stock timeline viewer programs for hourly and day data with candle-wick graphs?

Jezza

 

[ctur0001]

Yeh somebody will read it here package it up in some glossy crap and it will be in India or China being totted as the next Big thing.

You know if anyone finds this helpful in their trading I would appreciate the feed back --- you can private mail me.
Interested in practical application stories.

Thank you for your wonderful advice. Made the world of difference to me, didn't know how to differentiate and manage position sizing's for the different breakout patterns. This advice works with many different strategies be it trends, mean reversion and breakouts. Cheers mate.