Breakout Strategy Essay

Submitted By easyflier
Words: 2089
Pages: 9
Open Document
s t r at e g i e s

2012 I 09
Achim Mautz

Mr Achim Mautz has been working in asset management for more than
13 years, specialising in swing and day trading in recent years. Two years ago, he launched the stock trading club “RatgeberGeld”. He is also editor-in-chief of two stock-market newsletters, the “Investor Alert” and “Mojo Trades”, the latter being due to start publication in autumn.
Contact: office@ratgebergeld.at; www.ratgebergeld.at

Get the Best Possible Risk/Reward Ratio

Breakout Trading –
Done To Perfection
The base and break strategy is a very efficient and successful instrument in day trading and can be used very easily. This strategy is one of the approaches with the highest risk/reward ratio (RRR) in the entire world of trading. This article describes how the strategy works, which parameters must be met, and how entry and exit can ideally be timed. www.tradersonline-mag.com 48

s t r at e g i e s

2012 I 09

F1) Optimal Setup for Amarin ä The base and break strategy is a pure day-trading strategy in which the buys and subsequent sales are made within a trading day. Of course, everyone is free to extend this strategy as a swing trade, and to only time the base and break strategy for the entries. A
15-minute chart is used for the setup itself and only one indicator is necessary to deliver both the signal for the buy and the signal for the trailing stop. This is the nine-period exponential moving average or EMA(9) for short.
Parameters
1. Ideally, there is already a strong rise before we see a base (or orderly consolidation) in the chart. That increase may materialise on the same day, but may also have happened on the previous day. There are no precise definitions here of how high this rise must be in the run-up. It is enough for the rise to be visible and consequently for the EMA(9) to be in a “rising phase” mode. This is extremely important.
2. Secondly, it is necessary for us to be able to observe a base. This is actually nothing more than a sideways movement in which prices consolidate for a while
“to catch their breath” for the next movement of air. The base usually lasts between five and ten candles, which means an average of 75 to 150 minutes. The longer the base, the stronger the subsequent movement and also the probability of a positive final result. So more candles mean fewer false signals.
3. The third important factor is that the rising EMA(9) causes prices in the base, i.e. in the consolidation phase, to be pressed against the resistance line of the base and nearly squashed, figuratively speaking. Something similar happens when you step on a balloon which will then be compressed only to bounce up subsequently with a great deal of energy. As a rule, the base resembles an ascending triangle. In exceptional cases, however, it may also

The Amarin (AMRN) chart nicely shows the parameters necessary for a base and break trade. 1) Strong initial growth and rising
EMA(9), 2) forming a base, 3) compression of prices between EMA and the resistance line, 4) breakout. Source: www.tc2000.com

F2) Extremely high RRR at Rosetta Genomics

At Rosetta Genomics (ROSG), a base and break trade at only around 2.5 per cent distance to the stop was possible even though the stock had already risen 20 per cent on that day – to be followed by another 40 per cent later. It can also be seen clearly that if the price were to fall below the EMA(9) in the interim, the remaining part of the trade should not be smoothed immediately – but only when the 15-minute candle actually closes below the EMA. Source: www.tc2000.com

www.tradersonline-mag.com

49

s t r at e g i e s

2012 I 09

be a descending triangle with the former triangle to be preferred.
4. After prices are so compressed that there is almost no air left between the EMA(9) and the resistance of the base, there is a high degree of probability of the breakout occurring, the so-called “break”. This, in turn, is then the buy signal, too.
Assessment of the Setup
All in
Show More

Related Documents: Breakout Strategy Essay

How China Can Build A Global Brand Essay

an economic superpower. “Their [companies’] previous competitive edge — being the cheapest — is increasingly impossible to sustain,” argues Jan-Benedict Steenkamp, professor of marketing at UNC Kenan-Flagler Business School and co-author of "Brand Breakout: How Emerging Market Brands Will Go Global." “They need to start to add value to the product,” he adds. “This is impossible without branding the product.” But how exactly do you build a global brand? That’s the big question that many big Chinese…

Words 1041 - Pages 5

Macville Conference Essay

2013 PortFilio Samarut Antoine 04/06/2013 MacVille Espresso coffee machine conference Table of Contents 1. Scope Specifications Page 1 2.1 Conference purpose 2.2 Conference contact person’s details 2.3 Date and duration of the conference 2.4 Description of the target market 2.5 Conference location 2.6.1 Floor plan of total venue 2.6.2 Room set-up for main conference session 2.6.3 Room set-ups for break out conference…

Words 4167 - Pages 17

Learning Styles Essay

Assessing an Acknowledging your Learning Strategies: A Key to Success Nicole Nelson Grand Canyon University: NRS-429V Family-Centered Health Promotion September 12, 2014 This paper will summarize a student's specific learning style by listing and comparing the student's preferred learning strategies, as well as discuss awareness of an individual's learning styles, preferences, and strategies that influence teaching and learning. “Learning strategies are used by students to help them understand…

Words 916 - Pages 4

Mexican Drug Trafficking Research Paper

just Mexico’s problem, it is a critical issue that impacts the global community, and as such, it is imperative that we create an allied front to shut it down and restore peace. With the knowledge that the former president of Mexico had launched a strategy that caused a crackdown, . Reiterating with approval that higher authority in Mexico would surely benefit them as well as higher trained jurisdiction. Crime is among the most urgent concerns facing Mexico. As Mexican drug trafficking with the work…

Words 530 - Pages 3

Examples Of Non Monetary Incentive

Non-monetary Incentives I found that non-monetary incentives proved to be very effective in relieving stress on the job. Such incentives can include “BreakOut Zones” which provides an ideal environment for personnel to unwind between long tasks. According to the simulation, these “zones” help reduce stress levels that may result from excessive workloads. The zones also ensure that the personnel is more relaxed and alert while performing their tasks. In this zone, games and movies are provided…

Words 604 - Pages 3

Taylorism: Scientific Management Essay

there are some issues which are brought to light. For instance, if undergoing with the tide of the theory, workers would abuse of the employer’s trust, and moreover, better employees would be compelled to confirm with the weakest’s group working strategy. Secondly, the implementation of a proper methodology of activity in the Scientific Management, propels a natural tendency of enjoying the activity and mix it with harmony among the workers. As it is believed, a healthy co-operation promotes the…

Words 749 - Pages 3

Just war Essay example

Cicero, Saint Ambrose, or Saint Augustine. To begin, “a war must only be started after all other attempts of resolving an issue have failed (Christopher 2003).” Discussions and compromises by the two opposing sides must be attempted prior to the breakout of a war. In simple terms, if a declaration of war is to be just, it is because all angles of prevention have been stressed, resulting in the last resort of war. Next, “a war must only be started as a way of defense after a provocation has already…

Words 846 - Pages 4

action PLAN Essay example

cognitive characteristics of why and how a student responds or is unable to perform (Denton, et al, 2013). Literature on Differentiated Instruction (DI) was also looked at and noted that DI is the act of meeting students at their individual levels during breakout sessions (small groups). “The Differentiated Classroom,” states that when teachers provide students with instruction on their performance level, students are able to progress academically (Tomlinson, 1999). Looking at both pieces of literature with…

Words 847 - Pages 4

International Beeznezz Exam Review Essay

Germany…etc. 12.2% unemployment in the Eurozone Greece needed a bailout of around $163 billion at first, then the second time was $157 billion Began as slow growth in financial crisis of 08-09 Greece is particularly high Global Entry Strategies Used by IBs; compare and contrast entry methods Outsourcing – helps profits but why so controversial? (NIKE case study) Ethical dilemmas- bad working conditions, expropriation of the workplace – low wages, long hours…etc. Also unethical towards…

Words 1308 - Pages 6

University System of Georgia and Concourse A&b Essay

STUDENT ORIENTATION SCHEDULE January 9-11, 2014 Renaissance Concourse Hotel at the Atlanta Airport THURSDAY, JANUARY 9, 2014 TIME EVENT LOCATION 4:00 – 7:00 PM Early Registration and Reception Snacks will be served/Bar available upstairs Registration Booth FRIDAY, JANUARY 10, 2014 TIME EVENT 7:30 – 8:30AM Registration Registration Booth 7:30 – 8:30 AM Continental Breakfast Registration Booth 8:30 – 9:00 AM Introduction, Expectations, and Ice Breaker…

Words 546 - Pages 3