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My Breakout-Breakdown Trading Strategy for Using eSignal

My Breakout-Breakdown Trading Strategy for Using eSignal

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Published by Michael Harnack

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Published by: Michael Harnack on Oct 25, 2010
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10/25/2010

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My Breakout/Breakdown Trading Strategy for Using eSignal
Strategy: 2-Day High/Low Breakout StrategyUsing eSignal on 6 monitors, I combine this breakout strategy with several of eSignal's advancedchart indicators to identify breakout-long and breakdown-short trading entry opportunities.Advanced Chart Indicators Used: 1-minute candlestick chart, Fibonacci retracements, stochasticsand volume bars with time and sales (expanded view).Market Charts Used: 1-minute line TRINQ chart, 1-minute line COMPQ chart, 1-minute line$SOX $GSO $NBI sector chart indicators. I use a quote box with ranked sector percentages(change from open) and a 2-day, 2-minute candlestick chart to identify when a stock is movingoutside of the previous day's trading range on higher volume.Timing: Trades of 1- to 15-minute round-trips executed primarily during the 9:40 a.m. to 10:30a.m. (Eastern Time) time frame on days on which the Nasdaq composite (COMPQ) is tradingoutside the previous day's high/low range.
 
Trade Entry Using eSignal: Starting at 9:35 a.m. (ET), scan for stocks that are making thestrongest percentage change (from the open) in a quotebox. Pull these up on a linked chart toidentify those that are moving outside their previous day's trading ranges (screenshot 1). Thegoal is to identify stocks for long/short opportunities once they have moved above the previousday's high or below the previous day's low.Filters: To avoid false breakouts/breakdowns, use the following indicators: (a) The stock must bein one of the strongest 2 sectors for the day (as measured by percent change from open), (b) Thestock's volume bars on the advanced chart must be increasing during the 3 minutes prior to thetrade entry, (c) Time and sales must be speeding up (faster transaction rate) at the time of entry,in the direction of the trade, (d) Entry should be no sooner than .3 points higher than the previousday's high for a long or no sooner than .3 points lower than the previous day's low for a short(screenshot 2).Trade Exit Using eSignal: One of eSignal's many strengths is the ability to use an expanded timeand sales chart in combination with the Advanced Chart indicators. Use a trailing stop of nogreater than .2 points for all daytrades, and look for an exit when the expanded time and sales

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