Learning to catch High Probability Breakouts
- Thread starter amitrandive
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..contd
7)Measured moves
The market often tries to do something twice. The result is that most tops are variations of double tops, most bottoms are variations of double bottoms, and most trends usually have at least a second leg with the size of the second leg related to that of the first leg. Everyone is familiar with a leg 1 = leg 2 move, where the market has a second leg that is almost identical to the length of the first. Also, traders look for a measured move after a breakout from a trading range and they expect the move to be about the same size as the trading range is tall. The are many other types of measured moves that the computers use to either take profits or to enter reversal trades, and many are based on intraday gaps, or the height of breakouts.
7)Measured moves
The market often tries to do something twice. The result is that most tops are variations of double tops, most bottoms are variations of double bottoms, and most trends usually have at least a second leg with the size of the second leg related to that of the first leg. Everyone is familiar with a leg 1 = leg 2 move, where the market has a second leg that is almost identical to the length of the first. Also, traders look for a measured move after a breakout from a trading range and they expect the move to be about the same size as the trading range is tall. The are many other types of measured moves that the computers use to either take profits or to enter reversal trades, and many are based on intraday gaps, or the height of breakouts.
another fall?
nice correlation for 19 bar cycle with a bearish engulfing . phasor look smooth.
I think high of friday (20th) had to be higher than thursday (19th) and low of friday had to be lower than thursday for it to be engulf. This was routine weakness with budget news looming at horizon.
This cycle thing looks interesting. Is it reliable? There are too many versions of this. How to actually practically interpret this?
What is this Phasor thing?
i take only open close,if open-close range much bigger than previous.
fundamentally weak as you said.
indeed. very interesting. but NOT RELIABLE.
problem no 1.> statistically market 70% trending and 30% cyclic.
problem no 2.> to know market in cyclic mode you have to wait and watch for a certain period.
problem no 3.> cycle can vanish anytime. after that wait&watch when u know now its cyclic u enter and suddenly u see that cycle already gone! frustrating.
problem no 4> hard to find dominating periods of cycle. lots of theory, but no one accurately can tell it. bartels test a good hope.
i personaly not rely on cycles much BUT i always look into this.now i am a top/bottom catcher trader. and i try to trade only when market cyclic, with price action.
http://www.mesasoftware.com/mesa_phasor.htm
fundamentally weak as you said.
indeed. very interesting. but NOT RELIABLE.
problem no 1.> statistically market 70% trending and 30% cyclic.
problem no 2.> to know market in cyclic mode you have to wait and watch for a certain period.
problem no 3.> cycle can vanish anytime. after that wait&watch when u know now its cyclic u enter and suddenly u see that cycle already gone! frustrating.
problem no 4> hard to find dominating periods of cycle. lots of theory, but no one accurately can tell it. bartels test a good hope.
i personaly not rely on cycles much BUT i always look into this.now i am a top/bottom catcher trader. and i try to trade only when market cyclic, with price action.
http://www.mesasoftware.com/mesa_phasor.htm
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ONGC weak structure confirmed as per our analysis.ONGC closed at 345.
Candlestick formation should be near important support/resistence zone.
Check the spinning top around 370 levels on 4th Feb 2015.
A great reason for shorting the next day.
Daily Chart of ONGC.
Lesson learnt : Price Action is the Ultimate indicator and a Holy Grail.
Candlestick formations are significant but they should occur near important support or resistance zone.
Candlestick formation should be near important support/resistence zone.
Check the spinning top around 370 levels on 4th Feb 2015.
A great reason for shorting the next day.
Daily Chart of ONGC.
Lesson learnt : Price Action is the Ultimate indicator and a Holy Grail.
Candlestick formations are significant but they should occur near important support or resistance zone.
ONGC Weakness continues.Closing at 339.55 on 13/2/2015.
Daily Chart of ONGC.
Daily Chart of ONGC.
Daily Chart showing weakness in ONGC.
Closed at 314.9 today.
Daily Chart showing weakness in ONGC.
Closed at 314.9 today.
Take a look at Bharti Airtel. Its going to be testing that 340 zone again for the 4th time.
Thanks ,It looks like that on ONGC.
Daily Chart of ONGC(zoomed out)
Bharti looks interesting
Daily Chart of Bharti
Just a friendly advice, we are not supposed to post targets in TJ
http://www.traderji.com/your-feedback-suggestions/97239-sebi-rules-analysts-etc.html#post1047218
Daily Chart of ONGC(zoomed out)
Bharti looks interesting
Daily Chart of Bharti
Just a friendly advice, we are not supposed to post targets in TJ
http://www.traderji.com/your-feedback-suggestions/97239-sebi-rules-analysts-etc.html#post1047218
Don’t Chase Breakouts
http://lessons.tradingacademy.com/a...0e5f25&elqCampaignId=2016&elqaid=5496&elqat=1
Whenever I happen to watch business television, I can’t help but notice how the pundits keep mentioning the stocks or other securities that have moved the most for the day or week. They seem to get more excited the higher prices have already moved. I have also noticed that most novice traders and investors seem to share that same enthusiasm and buy these same securities at elevated levels.
I have read many books on trading and investing for both professional advancement as well as an attempt to improve my personal skills. In the majority of these books, they expound on the virtue of buying breakouts to new highs.
This is silly and completely contrary to what we do in our day to day lives. Could you imagine going to an electronics store, (ok, I know we buy things online now) and not buying a TV because it was on sale. Instead, you wait until the price not only goes back to regular price, but actually rises! I’m sure you are shaking your head at this point because you know that you wouldn’t do this. But you probably have in the markets.
Professionals know that novice traders do this and they love to separate them from their money. Look at the following chart of Apple. Novice traders bought the breakout of the intraday high. The high volume confirms this. Immediately after the novice buying pressure was absorbed by the market, prices dropped to the open of the breakout candle to trigger the novices’ fear and stop loss orders. Once those novices are out, price begins to rise with the professionals having bought the pullback. The novices who were stopped out are likely to jump back in again and help the pro’s long positions.
Sometimes the climb will occur the following day instead of the same day. On the chart of SPY, the ETF that tracks the S&P 500, you see the novices again with their signature high volume accompanying their chasing the breakout of the day’s high. The end of the day was profitable for the professionals as they sold short to the novice traders.
Those novices who were stopped out likely lamented the move as price gapped up the next day without them.
Investors are not immune to chasing price and may even be more susceptible. Many investors will jump into fast rising stocks for fear of missing out. They will even buy in front of an earnings release expecting to make a quick fortune on a favourable release.
Recently, the retailer Bed Bath and Beyond (BBBY) released their fourth quarter earnings report. On the day of the release investors and traders bought the stock as it climbed and broke above its 52 week high. Once more you can see the increase in volume as their buying frenzy reached a climax. Unfortunately, the report was not what they would have liked and prices gapped down about five percent the next day.
This could have easily been avoided. An educated trader or investor knows to look back in price to find quality demand zones in which to buy and quality supply zones where they sell or short. One year prior to this earning release, there was another earnings release that caused a large gap down and a supply zone. This would have told you not to buy BBBY. You may have even wanted to have shorted the stock instead.
You must remember that trading a stock into an earnings release is incredibly risky and is more akin to gambling than trading. In this case the supply is a warning sign not to buy or to exit a long position, not to short. But it highlights some key mistakes that novices make in the markets. They often buy in front of a supply zone and they sell in front of a demand zone.
Without looking left on our charts, we will not see the signs that tell us where prices will turn and will be doomed to repeat the same novice mistakes.
http://lessons.tradingacademy.com/a...0e5f25&elqCampaignId=2016&elqaid=5496&elqat=1
Whenever I happen to watch business television, I can’t help but notice how the pundits keep mentioning the stocks or other securities that have moved the most for the day or week. They seem to get more excited the higher prices have already moved. I have also noticed that most novice traders and investors seem to share that same enthusiasm and buy these same securities at elevated levels.
I have read many books on trading and investing for both professional advancement as well as an attempt to improve my personal skills. In the majority of these books, they expound on the virtue of buying breakouts to new highs.
This is silly and completely contrary to what we do in our day to day lives. Could you imagine going to an electronics store, (ok, I know we buy things online now) and not buying a TV because it was on sale. Instead, you wait until the price not only goes back to regular price, but actually rises! I’m sure you are shaking your head at this point because you know that you wouldn’t do this. But you probably have in the markets.
Professionals know that novice traders do this and they love to separate them from their money. Look at the following chart of Apple. Novice traders bought the breakout of the intraday high. The high volume confirms this. Immediately after the novice buying pressure was absorbed by the market, prices dropped to the open of the breakout candle to trigger the novices’ fear and stop loss orders. Once those novices are out, price begins to rise with the professionals having bought the pullback. The novices who were stopped out are likely to jump back in again and help the pro’s long positions.
Sometimes the climb will occur the following day instead of the same day. On the chart of SPY, the ETF that tracks the S&P 500, you see the novices again with their signature high volume accompanying their chasing the breakout of the day’s high. The end of the day was profitable for the professionals as they sold short to the novice traders.
Those novices who were stopped out likely lamented the move as price gapped up the next day without them.
Investors are not immune to chasing price and may even be more susceptible. Many investors will jump into fast rising stocks for fear of missing out. They will even buy in front of an earnings release expecting to make a quick fortune on a favourable release.
Recently, the retailer Bed Bath and Beyond (BBBY) released their fourth quarter earnings report. On the day of the release investors and traders bought the stock as it climbed and broke above its 52 week high. Once more you can see the increase in volume as their buying frenzy reached a climax. Unfortunately, the report was not what they would have liked and prices gapped down about five percent the next day.
This could have easily been avoided. An educated trader or investor knows to look back in price to find quality demand zones in which to buy and quality supply zones where they sell or short. One year prior to this earning release, there was another earnings release that caused a large gap down and a supply zone. This would have told you not to buy BBBY. You may have even wanted to have shorted the stock instead.
You must remember that trading a stock into an earnings release is incredibly risky and is more akin to gambling than trading. In this case the supply is a warning sign not to buy or to exit a long position, not to short. But it highlights some key mistakes that novices make in the markets. They often buy in front of a supply zone and they sell in front of a demand zone.
Without looking left on our charts, we will not see the signs that tell us where prices will turn and will be doomed to repeat the same novice mistakes.
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