Picking up breakouts on volume and price is quite easy. Trivial actually. There are MANY. Since we have only mentioned two plays, that both were part of the recent stock kiting mania, the method looks extra tasty. Let's see a backtest of how this kind of play does over a representative sample WITH exits. The whole key to these things is how far you get to carry the ball, without blowing up the account when they crash. Not saying these won't make you a millionaire, probably will.
good points about exits the turtles (if you care to read about them on originalturtles.org) noted that "trend following" required sometimes watching a 100% gain retract 20, 40%, recover, then continue the climb. this does take some huevos. Turtles, Van Tharp, Seykota, Schwager, O'Neill, etc, all have a variety of risk control strategies and recommendations of when to sell. I gravitate towards 2 X ATR. I will note however, that the MAJORITY of "hot stocks" since March 2003 all broke out, and climbed, and stayed above their 50-day EMA until finally selling off (and thus penetrating the 50-day EMA). One could (again, it takes some huevos and tolerance) place a trailing stop at the 50-day EMA, and raise it as the price rises. the 50-day EMA is mathematically derived from price itself, so both the breakout strategy and EMA stuff are both "price only" information. No fancy indicators or gimmicks advertised in the magazines. Simple (for me) is better. Other people like (and thats fine) to use candlesticks, Elliott Wave, Gann Theory, Aroon, StochRSI, etc, etc. I need to change my flat tire. Please tell me the simplest way to do it. I like simple. just some thoughts. interestingly, for the 100's of "how to buy" opinions there are 100's of "when to sell" also......thats what makes trading fun We all would agree however, that a trader must have SOME exit strategy and not just buy it, watch it rise, and high-5 himself, with no clue how to get out. SOME sort of exit rule must exist. good luck
billprittjr, not to rain on your parade, but have you backtested this? It doesn't backtest very well over a longer term from what I see. Here's the criteria I used, based on your posts here and on other forums: Nazdaq stocks with strong IBD rankings; if 60 day EMA volume triples and price breaks 60 day high, buy stop next day at previous day high plus .10 exit on trailing stop of 2 * ATR(10?)
yes i backtested it and trade with this system only "flat base breakouts" some of it involved eyeballing the chart back-testing aside, you are not raining on my parade. I am up by 100K cash in 2 weeks in MAGS, and about 50K in IPIX using a flat base breakout system not much rain here
Right, not much rain. Just thinking that a storm may be brewing. Just thinking about your position sizing: at 4000 shares... what was your intial stop value? And how did you go about setting parameters in a backtest to capture just those breakouts from flat bases?
my scan returns a list of potentials then i eyeball the charts the charts that look attractive, I check for IBD group strength, etc in today's hot day of computer this, computer that, and pre-programmed systems sold for $2000 bucks in the back of magazines, I subscribe to the old fashioned chart reading approach, with "trend following" being the strategy. Most trends DO NOT result in profits, the ones that do, you ride them. Livermore said good traders let winners run and cut losers immediately. They DO NOT sell a winner early, etc. Again, after breakout, if the stock continues up, I place a 2X ATR stop as the price rises. you mentioned a "storm might be brewing" what makes you think that? Or do you just think it? Thinking is the mental version of a spoken opinion. I prefer to look at the facts, as depicted on the chart. Trend followers do not think all that much. Nor do they trade intra-day data. Boring old end-of-day data. Trend followers dont think, predict, opinionate, etc, etc. They just do. The trend of MAGS is up. I am in MAGS until the trend is not up. That simple. Trend following is pretty boring. No multi-colored indicators, no mutliple monitors hooked to your super PC, no live feeds of CNBC being piped into the trading room. I do use stockcharts.com for their chart stuff and I do use Investors Business Daily as a tool also. I trade using end of day data with a Quantex 266 mhz PC and a monitor that is so old that the screen is getting blurry. I encourage everyone to read some "classics" such as Livermore, Weinstein, O'Neills books, Darvas, Spereando, Zweig. I also DIScourage all the "You can be a Super Trader" or "Day Trade to Billions" or "Super Swing Trading" or similar titles. All those books are garbage, in my opinion. I guess my post "rained on the parade" of the day trading crowd, huh. I apologize good luck