Point Break Charts

D

DerferMark

I've been experimenting with Point Break charts and wondered who else is using them? And how do you use them? They seem to provide some great entry signals and capture the meat of any moves. Early exits seem required for any choppy days however but preliminary backtesting shows great promise.

Attached is ER2 3 min. chart from yesterday 11/29/06
 

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No feedback yet huh? Perhaps the attached will peak your interest. I've only backtested 15 days but it looks nice to me. I did realize the chart posted above was an exceptionally good day.

Maybe nobody uses this type of chart to trade with? Or you don't have it available with your charting package? I use eSignal.
 

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Point Break?..............Wasn't that a movie with Keanu Reeves and Patrick Swayzee in the early 1990's? What's the gist of the charting method?
 
Quote from nazzdack:

Point Break?..............Wasn't that a movie with Keanu Reeves and Patrick Swayzee in the early 1990's? What's the gist of the charting method?
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Good one Nazz - sometimes I feel like I'm parachuting without a parachute! :eek:

Point Break is also sometimes called 3 Line Break - google either and you'll find tons of material. From 1 website:
"Three line break charts on the other hand usually help traders more accurately determine the current direction of the trend and alert them sooner when the trend has changed than do other methods (stochastics, moving average crossovers, etc). Three line break charts display a series of vertical boxes that are based on the closing prices. Every time there is a higher close a new green bar is created. When the price closes below the low of 3 green boxes the trend shifts to down and we start drawing red boxes. Every new closing low draws a new red box and so on."

My 1st chart actually shows a 5 Line Break.
 
I experimented with Point Break charts once (it was three line break) and found out that it's hard to use them intraday since they are based on closing prices and it's very difficult to exactly control risk.

Also choppy periods are very harmful for this kind of trading.

Maybe there are some ways to fix these problems.
 
Attached is today's chart so far today. A very nice profitable move today for 7 pts. But I got out early for just 4.5

I think this strategy can be very successful intraday but one has to fine tune what chart period (1 min., 3 min., 10 min., etc.) works best for them. The question I am still contemplating is will the big winners like today and 11/29 be enough to more than offset the losses on choppy days? And/or how best to identify when NOT to take trade signals (during choppy periods).

Some say don't take a Green bar trade unless it is preceded by at least 3 Red bars, and vice versa. By "bar" I'm referring to the larger boxes on my charts, not individual candles.
 

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Quote from DerferMark:

No feedback yet huh? Perhaps the attached will peak your interest. I've only backtested 15 days but it looks nice to me. I did realize the chart posted above was an exceptionally good day.
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Have you simulated with commissions and 1 tick slippage included ?
7 trades a day seems to trade profitably...
 
Quote from DerferMark:

Attached is today's chart so far today. A very nice profitable move today for 7 pts. But I got out early for just 4.5

...
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Thanks for the info DM.

If you look closely at the chart, your exit point was not too far off from where the market reversed and gave you a buy signal. So unless you are using a good trailing stop to lock-in profits you would have given back a not insubstantial amount of money.

That's one of the main reasons that I don't use the 3-Line Break charts anymore.

Regards,

JJ
 
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