breakouts - how calc enter, stop and target

M

metotron

Hi all.
Need some advice from people who trade the channels.
Let's imagine we have a flat channel. The parameters are: length 12 days, width 2*ATR(20). I want to trade the breakout.
So, for the profit I need to answer some questions before:
1. Where to put my orders? I think that not only I can see that channel and some guys will put orders on the borders and wait for breakout and breakdown. But the stops will be in the different places. So, how do you think what is the distance outside the channel borders is "stop loss zone"? I think that place is the best for breakout orders.
2. If I put an order in the correct place, I need to put my targets. So targets should have 2 components: time and price. How do you think what is a reasonable time for target? If we have 9bars flat, should we expect 9 days move or 5 days from that range? The same about price targets - what is the best way to calc price target - the 100% of range or more/less?

So I ask not the rules but only ideas and thoughts.
Thanks!
 
What we think is irrelevant. You are asking the right questions but you need to be able to test various exit criteria on actual data.
 
Hopefully i have the trade on long before the breakout. I find once you’re staring at the breakout, you’re cornered if you’re not in yet (too many false bo’s). Best wait for the throwback if there is one, and trade that. That’s just my experience.
 
metotron said:
Hi all.
Need some advice from people who trade the channels.
Let's imagine we have a flat channel. The parameters are: length 12 days, width 2*ATR(20). I want to trade the breakout.
So, for the profit I need to answer some questions before:
1. Where to put my orders? I think that not only I can see that channel and some guys will put orders on the borders and wait for breakout and breakdown. But the stops will be in the different places. So, how do you think what is the distance outside the channel borders is "stop loss zone"? I think that place is the best for breakout orders.
2. If I put an order in the correct place, I need to put my targets. So targets should have 2 components: time and price. How do you think what is a reasonable time for target? If we have 9bars flat, should we expect 9 days move or 5 days from that range? The same about price targets - what is the best way to calc price target - the 100% of range or more/less?

So I ask not the rules but only ideas and thoughts.
Thanks!
More...


These sorts of parameters have been well studied by Thomas Bulkowski. Have a look at thepatternsite or his Encyclopediae of Chart Patterns or of Trading Classic Chart Patterns.
 
You don't need a channel to find out a breakout. You just need to identify key areas. Better study key moving averages

metotron said:
Hi all.
Need some advice from people who trade the channels.
Let's imagine we have a flat channel. The parameters are: length 12 days, width 2*ATR(20). I want to trade the breakout.
So, for the profit I need to answer some questions before:
1. Where to put my orders? I think that not only I can see that channel and some guys will put orders on the borders and wait for breakout and breakdown. But the stops will be in the different places. So, how do you think what is the distance outside the channel borders is "stop loss zone"? I think that place is the best for breakout orders.
2. If I put an order in the correct place, I need to put my targets. So targets should have 2 components: time and price. How do you think what is a reasonable time for target? If we have 9bars flat, should we expect 9 days move or 5 days from that range? The same about price targets - what is the best way to calc price target - the 100% of range or more/less?

So I ask not the rules but only ideas and thoughts.
Thanks!
More...
 
Thanks all for feedback
@victorycountry Could you give some example what do you mean "key areas"?

@tomorton Thanks! His site has a lot of info. Some researches look "older" than they should be, but the ideas are very clear and I think I can restudy some of his ideas.
 
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