Scrip : Stock Future
Timeframes: You need the 1hr and 5min timeframes for this strategy (this is a multi-timeframe trading setup)
Indicators: none required
BACKGROUND
This breakout Stock trading strategy allows you to catch the early move of price when it is starting to establish its trend or market direction for the day.
Here’s what you need to know:
- The Indian Market Opens at 9:15 AM Indian Standard Time
- Then the Indian Market opens an Hour later .
This is the Indian Stock trading session and stock market starts its day in india first.
BREAKOUT STOCK TRADING STRATEGY RULES
Here’s how you trade this Stock breakout trading strategy:
- Open up with 1 hr time frame chart
- Then find out the “price range” from 9:15 AM to 10:15 AM which means you have to look for the highest high (peak) and the lowest low (bottom) of the price in that range in that time.
- Then Draw parallel horizontal lines through those two price extremes-this will create a tunnel.
- This step here is very important: then switch to a 5 minute chart and wait and watch to see if a 5 minute candlestick closes outside of the tunnel.
- If it closes above the highest high, you initiate a buy order
- If it closes below the lowest low, you initiate a sell order.
- Buy order can be at market order or buy stop order. A sell order can be a market order or sell stop order.
- Place your stop loss at least outside the tunnel (should not be exactly on the tunnel lines).
This chart below will make this strategy much more clearer. This is the 1hr Stock chart where you begin your trading analysis following the steps given above:
This 5 minute chart below is where you trade. That’s where you wait patiently to see any 5 minute candlestick breaks out of the tunnel and and if it closes above it, you initiate a buy trade and if the closes below it, you enter a sell trade.
TAKE PROFIT TARGETS
You can use these few options here to set your take profit targets:
- 1:1 times what you risked.
- if buy trade, set your Take Profit targets within the previous swing high (peak) or if sell then use a previous swing low point (bottom).
HOW TO TRADE MANAGEMENT
- move initial stop loss to break even when market moves by the amount risked and continue to trail stop it behind each new low peaks that form (for sell order) and higher bottoms that form (for buy order)
DISADVANTAGES OF THE STOCK BREAKOUT TRADING STRATEGY
All Stock trading strategies and systems have weaknesses. And as such this strategy is no exception:
- false breakouts in the 5 minute timeframe can happen and get you stopped out.
- for this strategy to work, the market has to be start the day in a very strong trend
ADVANTAGES OF THE STOCK BREAKOUT TRADING STRATEGY
- a very simple Stock strategy with simple rules easy to understand and execute.
- its based on price action trading and no indicators are required.
- has the potential to catch price moves early before the day’s major trendy move happens so if your direction is right, you can make a lot of profitable easily.
Note:
Risk Disclaimer
All information is for educational purposes only. Nothing should be considered as a buy or sell recommendation. The risk of loss in trading stocks, commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if trading is appropriate. When trading stock, futures or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. This email may is a paid advertisement. It could be for a product or service that is not offered, recommended or endorsed by Stock Alphabets and neither the company nor its affiliates bear responsibility or control over the content of the advertisement and the product or service offered. Proceed at your own risk.
The information and material contained in these pages and the terms, conditions, and descriptions that appear are subject to change without prior notice. Investments in equity shares, debentures etc, are not obligations of or guaranteed by the Stock Alphabets, and are subject to investment risks.
All information is for educational purposes only. Nothing should be considered as a buy or sell recommendation. The risk of loss in trading stocks, commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if trading is appropriate. When trading stock, futures or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. This email may is a paid advertisement. It could be for a product or service that is not offered, recommended or endorsed by Stock Alphabets and neither the company nor its affiliates bear responsibility or control over the content of the advertisement and the product or service offered. Proceed at your own risk.
The information and material contained in these pages and the terms, conditions, and descriptions that appear are subject to change without prior notice. Investments in equity shares, debentures etc, are not obligations of or guaranteed by the Stock Alphabets, and are subject to investment risks.