Con-tango

Channel Breakout

I wanted to share with you guys the channel breakout formation setup I see in GC0604.

First, channels are a natural extension of the high (low) hooks mentioned in our previous post. Think of them this way, the more times a high (low) resistance (support) has been challenged the stronger it becomes, and the harder it is for prices to break away from the channel top (bottom).

Originating from Joe Ross’s channel breakout, I’ve set the following modified simple rules for this setup:

• There are two conditions to enter a trade:

The channel is at least 40 days old, or the breakout will take a 40 day high (low).

Buy (sell) on a stop at a price set at a quarter of the height of the channel above (below) the ceiling (bottom) of the channel.

• To exit the trade on a failure:

Sell (buy) on a stop at the opposite band of the channel; bottom (top) when long (short).

For our example, the height of the October – November 2005 GC0604 channel is $27.5 = $490.1 – $462.6,
then a quarter of the channel is $6.9 = 0.25 * $27.5,
the stop order is placed at $ 497.0 = $490.1 + $6.9
and the protective stop at $462.6.

Looking at this present GC0604 chart, we see a similar formation with a ceiling at $579.5 and bottom at $534.5; so we have a potential breakout trade if $590.75 is taken,
from $590.75 = $579.5 + 0.25 * ($579.5 – $534.5);
and a protective stop at $534.5.

(I would consider a $562.0 stop protection; $534.5 is too harsh for my taste…)

We’ll see what unfolds.

Optimal f

So you’ve got an idea and you want to know how good it is…

Continue reading…

Muddy’s method

Although I intend to give more weight in this blog to trading futures, I promised I would mention a couple of simple methods, -quickies, which are quite profitable; and, what’s more important for me, help complement futures’ trading.
Continue reading…

The MA bounce

This is a very effective play; I’ve never run any numbers, but it’s an above 70% win according to Linda B Rashcke, and I agree with her.
Continue reading…

Pivot points

Pivot points reflect floor traders quick calculation of the day’s support and resistance levels, – I can believe that, it’s a tradition from the pre computer era…

Continue reading…

Taylor’s method

George Taylor’s reading is quite confusing, I’ll try to simplify his
method as much as I can.

Continue reading…

An interesting method?

I was going over Van Tharp’s book, which is a must have, – to present it to you guys in a future post; when I ran into a very simple volatility breakout method in page 3, and I couldn’t resist posting it.

I think this would be a nice method to trade ESs and NQs.

Continue reading…