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> From: Paul Cote <cote@xxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Breakout from congestion
> Date: Monday, January 19, 1998 5:15 AM
>
> A relatively simple method of trading the market is to trade a breakout
> from congestion. A congestion is defined by a market that was trending
> but then begins going horizontal for a while. The confines of
> congestion are contained by two horizontal lines, one above and below.
> When the market closes above or below these lines, a position is taken
> in the direction of the breakout. The exit from the position is when
> the market reverses so a trailing stop would be the exit mechanism. Has
> anyone tried this trading method?
>
> Paul Cote
The range breakout is the guts of "Hit and Run Trading". It is a valid
methodology and works a good portion of the time. Most of the action
occurs the first day, therefore, if you are not daytrading, watch for a gap
up and immediate reversal. Sometimes these things are good shorting
oppurtunities.
Jack Hutchison
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