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what I use for a break-out filter is this.
Wait for Price to actually close out of the channel.
For a long trade, buy on the 50% retracement of the prior days high to
the prior channe resistance level.
Keep stops below the break-out days low.
The close above usually confirms the move, the retracement happens
almost everytime. the failsafe to make sure you get filled would be to
leave another order to buy the break-out days high. this is also a
good place to add to longs.
Short trades are the opposite (obviously).
______________________________ Reply Separator _________________________________
Subject: Re: Breakout from congestion
Author: Peter2150@xxxxxxx at Sydney-Internet
Date: 1/20/98 5:21 AM
In a message dated 98-01-19 13:12:50 EST, TProeber@xxxxxxxxxx writes:
> Sometimes (about 50% of the time), there will be a fake in the opposite
> direction of the eventual true breakout. How to filter ? . ? . ?
Joe Ross suggests the following.
1. Take the breakout, and set stops for a reversal at the other side.
2. Let the first breakout go and see if it falls back into the trading
range. Then take
2nd breakout in either direction. Should breakout and run, you missed
it and
wait for the next one.
He discusses these approaches in detail, in his books
Pete
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