Learning to catch High Probability Breakouts

[amitrandive]

Hi,
Suppose I have identified 10 stocks with breakout/breakdown levels.
Now as we know the stock can languish below the break out level for days.
How to catch the stock as soon as it breaks that level ?
We can not sit & watch all the stocks simultaneously.
I was looking for some procedural steps to do so.
Every day the list of stocks goes on increasing as new patterns are formed everyday.
Have missed big moves just because was not able to catch the stock intime or was not watching that particular stock that day.
My trading terminal does not have alerts facility.

Extremely good question.
Even I am learning how to do that.
Lets face it , it is not possible for us to catch/trade every breakout.Also we cannot have a huge watchlist which goes on increasing everyday.

Though there are some thumb rules.

Six steps to profitable breakout trade

The trading plan for a breakout strategy is based on several simple steps. They are simple but must be done well to achieve desired results and make profits from a trade.

1. Check that general market trend
3. Pick the best breakout trading opportunities available today
5. Set an entry, stop loss and ideal target values for your trade opportunity, i.e. prepare a trade setup
   
6. Check risk reward ratio
   
7. Put the ticker into watch list and wait for entry trigger
   
8. Manage the trade after an entry till exit

A fantastic Article in this regard is

The Anatomy Of Trading Breakouts

Also if you cannot watch the terminal for a whole day,you need some trigger mechanism to alert you in this regard.
You can try many mobile apps which are available for that.
Also many softwares are available for alert facility.

 

[ethan hunt]

Following can be tried:

Make an excel sheet with stock symbol & break out level.
Link that excel sheet to the terminal.
As soon as the price reaches say 1 re. less that breakout level, a cell changes color to green for buy & red for sell.
Jump to terminal & execute trade.
Update the excel sheet everyday at EOD with new stcoks to watch.
Update Market watch everyday at start of day with new stcoks to watch.
Will work for DT/DB/CH etc

Q is how to incorporate Sound alerts in excel ?

Found this: http://excel.tips.net/T006559_Conditionally_Playing_an_Audio_File.html

Let us see ...

 

[amitrandive]

Following can be tried:

Make an excel sheet with stock symbol & break out level.
Link that excel sheet to the terminal.
As soon as the price reaches say 1 re. less that breakout level, a cell changes color to green for buy & red for sell.
Jump to terminal & execute trade.
Update the excel sheet everyday at EOD with new stcoks to watch.
Update Market watch everyday at start of day with new stcoks to watch.
Will work for DT/DB/CH etc

Q is how to incorporate Sound alerts in excel ?

Found this: http://excel.tips.net/T006559_Conditionally_Playing_an_Audio_File.html

Let us see ...

Seems like a good idea.
I have no knowledge of coding in excel.

You can form the system and trade per that,but you need to have all your trading rules/money management rules/risk management rules defined first(preferably written on paper).

Before testing any system in real time with real money,please make sure you have tested that system with paper trading/demo account trading.

 

[amitrandive]

 

[niftyninjatrader]

Is there any difference (by nature or by result or by anything else) in various types of gaps, you mentioned.
Please clarify/elaborate
Thanks

 

[sangram1705]

Amit ji,
How/why gaps occur. If it is gap up opening/ gap down opening one can assume that it is due to change of sentiment overnight.

but if gap occurs intraday where goes the bids & offers which were on screen in best 5 bid/offer windows. Mostly I have observed these intraday gaps occur in commodities.

 

[amitrandive]

Is there any difference (by nature or by result or by anything else) in various types of gaps, you mentioned.
Please clarify/elaborate
Thanks

Amit ji,
How/why gaps occur. If it is gap up opening/ gap down opening one can assume that it is due to change of sentiment overnight.

but if gap occurs intraday where goes the bids & offers which were on screen in best 5 bid/offer windows. Mostly I have observed these intraday gaps occur in commodities.

Yes, all gaps shown in the image are different,and there are different ways to trade them.

Some good links for understanding and trading gaps,

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:gaps_and_gap_analysis
http://www.investopedia.com/articles/trading/05/playinggaps.asp
http://www.swing-trade-stocks.com/gaps.html

 

[amitrandive]

Amit ji,
How/why gaps occur. If it is gap up opening/ gap down opening one can assume that it is due to change of sentiment overnight.

but if gap occurs intraday where goes the bids & offers which were on screen in best 5 bid/offer windows. Mostly I have observed these intraday gaps occur in commodities.

SangramJi

Various gaps reflect various sentiments.Please check the links given in the earlier post.
Also check this for intraday gaps.

http://www.mudraa.com/trading/68926/0/gap-trading-strategies-copy-paste-article.html

 

[vasan56]

upload pictures online

Amit,
For a proper rectangle,is there any condition regarding number of candles?

 

[amitrandive]

upload pictures online

Amit,
For a proper rectangle,is there any condition regarding number of candles?

Vasan

Ideally we should not impose any formula on the number of candles to trade a rectangular breakout.A rectangle may run for many weeks or even months.
Our job is to monitor a stock trading in a rectangle.

Keep that stock in a watchlist.Alert ourselves by way of some alert mechanism(broker terminal/mobile apps,etc),and trade the breakout when it happens.

Generally, the longer the pattern, the more significant the breakout

Some good links for understanding this pattern,

http://www.investopedia.com/articles/trading/08/rectangle-formation.asp
http://stockcharts.com/school/doku....nalysis:chart_patterns:rectangle_continuation.
http://www.babypips.com/school/middle-school/important-chart-patterns/rectangles.html