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  • Wednesday, August 31, 2005

    Winning Trading Strategy / Another Example



    This seems to be a recurring trade as of late.I only caught a very small piece of it,and the fact is I need to really start paying attention to these trades.I've shown a few examples of this trade in the past week or so and they keep appearing.The basis of this trade is a small channel forms between the 5 period sma and the 15 period ema.When price trades into the 5 sma as this channel widens there seems to be an explosion to the upside for longs and the downside for shorts.One characteristic coming to my attention is that the stock will be on track to trade at least 1.5 times it's average volume or higher.I have seen this pattern recurring in non-news related items also.I let myself get caught up in my comfortable stocks a little too much and missed the bulk of this move. For more examples of this type of trade go here and here.

    4 Comments:

    At 9:33 PM, Blogger TraderEyal said...

    Hey Doug, did this stock come up on an opening range breakout + volume type of scan? It looks like it was consolidating for the first half hour and then just took off at 10:30.

     
    At 9:43 PM, Blogger txtrader said...

    Let me check,but yeah I think thats what it was,I think it was on the 60 minute high as well,but that opening range breakout should have caught it.Checking now.

     
    At 9:47 PM, Blogger TraderEyal said...

    Thanks :) Enjoy your vacation! I'll be on a mini one myself as well.

     
    At 9:57 PM, Blogger txtrader said...

    Yeah, here we go. It showed up on a 30 minute opening range breakout,60 minute opening range breakout, and a big block trade at the bid right after those.Yes my volume setting in those scans are set at 1.5 ratio(X's average volume).Good heads up, I need to organize my scans better when I get back and have a seperate window for just opening range breakouts with volume.Need to start hitting those hard.They're havin' all that fun without me! :-)

    Have a good week!Cheers!

     

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