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Trading stocks based on breakouts of chart patterns
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Created: by MichaelWesten Attachments:39

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Trading stocks based on breakouts of chart patterns

  #21 (permalink)
Elite Member
Petah-Tikva, Israel
 
Futures Experience: Intermediate
Platform: MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Stocks
 
Posts: 20 since May 2011
Thanks: 0 given, 16 received

1-Dec-2011

This is the first post of December.
I would like to update that the new amount for 0.8% risk is $178 instead of $184 and for 0.5% risk is $111 instead of $115.

I have a problem attaching files today because for some reason I don't see the bar of yesterday (30/11).

New Orders

YHOO - Identified descending triangle on the daily chart, pattern length is about 2 months.

Actually, YHOO already broke to the upside (16.25) but since then it retracted. Because I want to put the stoploss below the last of the previous day, which is at 15.63, I calculated that I can't buy the stock above 16.03.

Therefore, buy limit order is set to 16.03, stoploss at 15.63, target at 18.03. I set the order for 270 units.

I will watch the stock today and if, near the end of the session, I will see it is not close to the day's low, I will adjust my buy order according to the stoploss being moved from 15.63 to the day's low (which is currently at 16.09).

BA - Identified up channel on the daily chart, pattern length is about 4 months.

Same with YHOO, BA already broke to the upside (69.75). According to my risk management, I could still enter the move.

Therefore, buy order is set to 70.45, stoploss at 68.49, target at 80.65. I set the order for 58 units.

BAC - Identified descending triangle on the daily chart, pattern length is about 3 months.

Breakout to the downside was set to 5.08, stoploss at 5.47, target at 3.3. I set the order for 443 units.

AA - Identified double top on the weekly chart, pattern length is about 2.5 years. see attached file.

Breakout to the downside was set to 9.78, stoploss at 10.63, target at 5.2. I set the order for 181 units.

Changes in existing orders

I updated the quantities of all the existing orders to reflect the new risk management values. Also, I adjusted the stoploss for some of the orders based on today's session so far.

New Positions

VIP - Buy order was executed at price of 12.01 for 427 units. Stoploss at 11.59 (risking 0.82%), target at 15

BA - Buy order was executed at price of 70.45 for 58 units. Stoploss at 68.49 (risking 0.51%), target at 80.65

AA - Sell order was executed at price of 9.78 for 181 units. Stoploss at 10.63 (risking 0.7%), target at 5.2

Attached Thumbnails
Trading stocks based on breakouts of chart patterns-aa.png  

Last edited by MichaelWesten; December 1st, 2011 at 01:07 PM.
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  #22 (permalink)
Elite Member
Petah-Tikva, Israel
 
Futures Experience: Intermediate
Platform: MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Stocks
 
Posts: 20 since May 2011
Thanks: 0 given, 16 received

Hi,

Due to the amount of time it takes me to update this journal and because I don't see a lot of interest from the members here, I am stopping to update the journal.

Have a nice weekend.

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  #23 (permalink)
Trading Apprentice
Dana Point
 
Futures Experience: Advanced
Platform: ensign, IB
Broker/Data: IB, Lightspeed
Favorite Futures: stocks
 
mRoss21's Avatar
 
Posts: 35 since Nov 2009
Thanks: 11 given, 16 received


Hi,

I've enjoyed reading your journal. I also trade stocks with IB, although I trade intra-day. I could see by the trade log you posted that you do trade live, as you stated.

You've given a lot of thought to risk management, which is very important. BUT I question your entries. Trading breakouts of simple chart patterns is a tough way to trade.

Trend lines are a nice visual, but in my opinion (and this is just my opinion) you should not trade the break of a trend line. Too many false breaks. If you insist on trading breakouts, you should think of support/resistance as a horizontal line and only take those breaks. Even if its only a minor swing point used to draw your trend line.

Anyway... good luck with your trading.

~Mike

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The following user says Thank You to mRoss21 for this post:
 
  #24 (permalink)
Elite Member
Canada
 
Futures Experience: Advanced
Platform: NT, TS
Broker/Data: Amp
Favorite Futures: ES
 
sharp2be's Avatar
 
Posts: 57 since Sep 2009
Thanks: 1 given, 69 received

Hi, my impression is that most people on this board trade futures, I think your thread is good but it depends on your objectives, I wouldn't worry about participation, use it to improve your trading.

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  #25 (permalink)
Elite Member
Atlanta, GA
 
Futures Experience: Intermediate
Platform: NinjaTrader, FCharts, Bulkowskis Pattern Recognition, Stockwatch
Favorite Futures: SPY, Stocks, Options
 
phillip's Avatar
 
Posts: 2 since Dec 2011
Thanks: 13 given, 1 received

Hi MichaelWesten,

I'm new to Big Mike's Trading forum and I've been reading each of your posts, catching up to the present time. I have greatly enjoy reading your entries, seeing your reasoning, looking at the charts and seeing the outcome. Just wanted you to know that. I hope your trading is going great and that 2012 will be an even better year.

Phillip

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  #26 (permalink)
Elite Member
San Diego CA, USA
 
Futures Experience: Beginner
Platform: TradeStation
Favorite Futures: YM
 
Posts: 22 since Jan 2012
Thanks: 12 given, 5 received

I would say keep it up. Patterns rock!

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