Channel Breakout : (Trading System 2)
We look for stock that break its channel. This alert is reported without confirmation of the breakout.
We buy each stock alerted (CHBO Alert).
This alert is provided by trade-ideas.
More info for this alert.
Below you can find a description of filters we are using to pick only the best patterns.
Buy Rules :
- Stock that get a CHBO Alert. (Trade-Ideas alert : Channel breakout)
Sell Rules :
- Sell the stock after 2 hours.
- Stock Price >1$
- Stock with a spread < 20 cent
- Average $ Daily Volume > 10 000 000$
- Volatile Stock : Volatility > 0.4%
- Current volume (Relative volume) > 2 and Current volume < 10
- Day Range < 70%
Very important information :
- We are using a simple sell rule, because we use an automatic system for picking theses stocks, and we are handling lot of data.
It means that if you use personal sell rules, you can highly improve this trading system results.
Here is some suggestions of what you can do :
- Use stop loss to protect you from loosing trades.
- Don't close the winning trades after 2 hours and let your profit run.
- Close position if it show a bearish pattern.
- Use a profit target to close positions.
Now this is the results and graph for this trading strategy :
Number of trades : 119
Winning trades : 61
Loosing trades : 56
Average performance per trade : 0.09%
Average Daily performance : 0.18% (For 2 hour holding period we can easily take two positions per day if there is enough alerts)
Average Monthly performance : 3.85%
NB : The average performance per trade is calculated with 0.1% commission and 0% slippage (We don't consider slippage because we buy and sell at the market price).