Buying the breakout

foredog · Aug 20, 2008

If you have three consecutive 30 min bars with the same high and buy when the stock trades two ticks above this range (eg 3 highs of 280, buy at 280.5), where would you place a stop?

at the low of the last candle?

or a few ticks below the 3 highs?

eg if the last bar was 275/80 stop at 274.5 or 279?

I know there's no perfect answer just wondering what everyone else does.

(haven't got a chart to attach at the moment, sorry)

Chorlton · Aug 20, 2008

foredog said:
If you have three consecutive 30 min bars with the same high and buy when the stock trades two ticks above this range (eg 3 highs of 280, buy at 280.5), where would you place a stop?

at the low of the last candle?

or a few ticks below the 3 highs?

eg if the last bar was 275/80 stop at 274.5 or 279?

I know there's no perfect answer just wondering what everyone else does.

(haven't got a chart to attach at the moment, sorry)

Wouldn't this depend on how agressive one wanted to be? If one wanted to be very agressive then a stop placement between the H & L of the last candle may also be a possibility.

Personally, I would look at previous set-ups to give me some indication of what kind of results (% winners and average # number of ticks that were being achieved). From this I could work out whether a tighter stop was needed or whether I could afford a bit of extra wiggle room.

rathcoole_exile · Aug 20, 2008

personally i'd look at using pivot points integrated into your breakout strategy, and then using them as both profit targets and stoploss exits

foredog · Aug 20, 2008

basically for the last few weeks i've been leaking money.

I've been buying/selling Uk stocks on the break of either an Inside bar or a double high (on 30min or 60 charts) in the direction of the day, and at the moment my win/lose ratio is about 6/1, not good.

Every time i deal and i have a stop just below the price i get hit then it goes my way, every time i leave my stop at the low of previous candle that gets hit too (or so it feels).

I'm not having big losses, less than 1% on each trade but it's still hurting now!

No up days in a fortnight's a killer for the brain!

Any ideas......anyone want to buy a big issue?

Cheers

Chorlton · Aug 21, 2008

foredog said:
and at the moment my win/lose ratio is about 6/1, not good.

Maybe i'm confused here but you are saying that you have a a win/loss ratio of 6:1 which is roughly 86% winners. IMO this is very good!!!

Assuming that your R:R is also reasonable, then coupled with your 1% risk per trade (again pretty reasonable), I would be very surprised if you weren't making money over the long term.

Chorlton

luckyd1976 · Aug 21, 2008

foredog said:
If you have three consecutive 30 min bars with the same high and buy when the stock trades two ticks above this range (eg 3 highs of 280, buy at 280.5), where would you place a stop?

at the low of the last candle?

or a few ticks below the 3 highs?

eg if the last bar was 275/80 stop at 274.5 or 279?

I know there's no perfect answer just wondering what everyone else does.

(haven't got a chart to attach at the moment, sorry)

Generally for my breakouts

1) Scalping *I would say +/- 0.5%
Examples... Long Stock at $100, Stoploss $99.50 Short Stock at $100, Stoploss $100.50

2) Daily charts *2-3 bar trailing or discretionary chart reading for sell signs.

foredog · Aug 21, 2008

Chorlton said:
Maybe i'm confused here but you are saying that you have a a win/loss ratio of 6:1 which is roughly 86% winners. IMO this is very good!!!

Assuming that your R:R is also reasonable, then coupled with your 1% risk per trade (again pretty reasonable), I would be very surprised if you weren't making money over the long term.

Chorlton

Got that a bit back to front, one profit, five or six scrappy losses for about the last week.

Not losing massive amounts, just my account slowly dribbling away.....

barjon · Aug 21, 2008

foredog said:
basically for the last few weeks i've been leaking money.

I've been buying/selling Uk stocks on the break of either an Inside bar or a double high (on 30min or 60 charts) in the direction of the day, and at the moment my win/lose ratio is about 6/1, not good.

Every time i deal and i have a stop just below the price i get hit then it goes my way, every time i leave my stop at the low of previous candle that gets hit too (or so it feels).

I'm not having big losses, less than 1% on each trade but it's still hurting now!

No up days in a fortnight's a killer for the brain!

Any ideas......anyone want to buy a big issue?

Cheers

foredog

uk equities have been pretty volatile of late, so maybe market conditions have changed since you tested your strategy.

If this bit Every time i deal and i have a stop just below the price i get hit then it goes my way is correct, then maybe you should consider trading the pullback after a break rather than the break itself.

I trade uk equities via 3 bar retracements off eod, so I'm taking a break of the swing low bar high. I want to see a bit of oomph in the break and not the price just staggering through. I go down through the timeframes to look at that.

Hope things improve for you

good trading

jon

foredog · Aug 21, 2008

Thanks Jon

I was considering waiting for pullbacks as you said, although you miss the odd one that takes off like a rocket you get to miss all the chopping about as well.

I'm sure there's light at the end of the tunnel, just hope it's not the 1215 from euston!

Buying the breakout

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