Tuesday, October 18, 2005

Strategy Session: Breaking Consolidations - Be There

Since we just announced the addition of 4 new filters (Ed.: see yesterday's blog entry), it is appropriate to create two new sample strategies utilizing them. As usual remember that these set-ups are sketches meant to give you an idea of how to model your own trading plan. Use this 'as is' or modify it to your own liking as many others do.

The Strategy: 3Day or More Consolidation + Breakout
This window looks for stocks that are consolidating for a period of at least 3 days and are now breaking out of that range. The idea is to look for basing stocks that are making a nice push upwards.

How Its Modeled:
In this strategy called 3 day + consolidation breakout we look for stocks that have been consolidating for at least 3 days or more with the new filter. Then we set a crossed above daily resistance alert with a 2 for the number of days resistance crossed. The volatility filter is there as a requirement that stock display some good movement on a regular basis - you could substitute the Min Current Volume filter if you wanted. It's simple and it follows our golden rule in modeling strategies: less is more.

Who Could Benefit:
These filters add to the growing list of alerts and filters that can target opportunities for traders with longer time horizons. Swing and longer term traders can do very well with these filters by using them to define the most appropriate trading universe to find the breakout or breakdown patterns they require.

Wait! There's More!
Here is an opposite of the strategy discussed above but with the other new filter added. It uses the position in the consolidation filter to enforce a maximum limit of where the stock can be in the height or percentile of the consolidation range.
4 Day Or More Consolidation + Breakdown

2 comments:

Anonymous said...

Keep up the good work! The blog is getting better and better.

Anonymous said...

I like these longer term filters with the alerts set as triggers....I think I am finally understanding how to get some power out of this....thanks guys