Articles in category swing_trading_bootcamp

Extremely simple breakout method Part2

Many people object to my use of 4% breakout method by saying it does not take in to consideration average range. A stocks average range might be 5% so a 4% b/o is not significant they argue.

So you want to make simple average range breakout scan.

It is very easy. 

(C - H1) >(AVGH20- AVGL20) and v>v1

In this PCF you can vary the AVGH20- AVGL20 part from 5 days to 63 days depending on what range you want to consider for breakout. 

A range breakout scan like this will produce less frequent signals compared to my 4% breakout scan.

Extremely simple breakout method Part1

What is a breakout.

It is a impulse move. Or a price increase on high volume in very simple language.

You people are making very complicated scans for it.

Here is a simple breakout scan :

Stock should be up 50 cents

Stock should have volume 10% higher than average 50 day volume.

Volume should be above 50000

A pcf for this would be: 

(C - C1) >.50 AND V>1.1* AVGV50and v>=500

IBD uses a similar approach to find breakout on CANSLIM stock.

The Stocks on the Move stocks are generated using this kind of scan. O'Neil in his book says on breakout day the stock should be up 50 cents and volume should be 40% more than 50 day average.

So the pcf would become:

(C - C1) >.50 AND V>1.4* AVGV50and v>=500

 

 

Why you need to have a breakout method Part3

 

In a strong bull market if you do not have breakout method you will never catch such explosive moves

Why you need to have a breakout method part2

 

In a strong bull market if you do not have breakout method you will never catch such explosive moves. 

Why you need to have a breakout method

 


In a strong market if you do not have a breakout method you are going to give up lot of opportunities. 

Think beyond 4%

Many times I am asked why 4% and why not something else and my answer is it works for me and  it is simple "universal" long signal I can use.

4% breakout idea came about when I was trying to improve on Mark Boucher (MB)  approach. One of the problem with MB approach was the time consuming process. One option was to develop custom software to do that. The other was to simplify it. That is how I replaced his 3 types of entry signals with one type.

The challenge for you people is to develop something new , based on a different concept. That is how you will find a different way of your own. 

Put your thinking caps on and think of different approaches to signal breakout.

Note: I will have more on exits later this week. As of now I want to focus on breakouts to continue the though process. 

Assignment: develop atleast one non 4% entry pcf. It cannot be just ok make it 3% or 2% or some thing like that. It has to be based on "different" logic.

Expanding 4% breakout idea: no ideas?

So no one has any ideas on how to expand on 4% breakout. I gave you 4 ideas and no one has even one.

4% breakout idea 4

 

Concept: I am a hedge fund and I can not trade the low liquidity stocks. I want only stocks with high liquidity. I want only stocks with 25 million plus dollar volume.

4% pcf

C >= 1.04 * C1 AND V >= 1000 AND V > V1

Create a Easyscan as follow

Common Stock

4% pcf= true

Volume (Dollars) 1-day value= 2500 to max

For every stock that shows up in scan look for catalyst the way we look at in EP.

4% breakout idea 3

 

 

Concept: Stocks with low price to sales ratio are considered value stocks and  tend to make big moves on breakout if there is a clear catalyst.

4% pcf

C >= 1.04 * C1 AND V >= 1000 AND V > V1

Create a Easyscan as follow

Common Stock

4% pcf= true

Price to sales  Rank= 1 to 20

For every stock that shows up in scan look for catalyst the way we look at in EP.

4% breakout idea 2

 

Concept: Stocks with high short interest  tend to make big moves on breakout if there is a clear catalyst.

4% pcf

C >= 1.04 * C1 AND V >= 1000 AND V > V1

Create a Easyscan as follow

Common Stock

4% pcf= true

Latest short interest Rank= 90 to 99

For every stock that shows up in scan look for catalyst the way we look at in EP.

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